The New Zealand dollar slipped to $0.586 on Monday, extending last week’s 0.6% decline, as the Reserve Bank of New Zealand’s cautious stance on further monetary tightening weighed on the currency. The RBNZ raised its official cash rate for a second straight meeting last week, but signaled that any additional increases are likely to be gradual amid mounting risks to the economic outlook.
Governor Anna Breman noted that the bank wants time to evaluate how earlier rate hikes are affecting the real economy, while Assistant Governor Karen Silk suggested policymakers are more inclined to wait until December before moving again. This cautious tone has led investors to reassess the likely pace of future tightening: market pricing now implies only about a 31% probability of a rate hike in October, while a December increase is largely priced in.
