The New Zealand dollar steadied around $0.585 on Thursday, but retained most of the prior session’s losses following a dovish shift in the Reserve Bank of New Zealand’s policy outlook. On Wednesday, the central bank raised its official cash rate by 25 basis points to 2.75%, marking a second consecutive increase and taking the rate to its highest level in more than a year. The move had been widely anticipated as policymakers continued efforts to rein in inflation running above target.
While the RBNZ signaled that further rate hikes may still be needed, its forward guidance was seen as more cautious than markets had expected, prompting a sharp selloff in the kiwi. Governor Anna Breman also emphasized that there is no predetermined path for monetary policy and that the timing of any additional rate increases remains highly uncertain.
