FX.co ★ NZ Dollar Falls Despite Strong CPI Data

The New Zealand dollar declined to approximately $0.591 on Thursday, ending its six-day rally. This decrease occurred despite consumer inflation data exceeding expectations, as it did not alter market anticipations for further monetary easing. The annual inflation rate in New Zealand increased to 2.5% in the first quarter, slightly surpassing the market's forecast of 2.3% and up from 2.2% in the preceding quarter. Nonetheless, this figure remains well within the Reserve Bank of New Zealand's targeted range of 1–3% for the third consecutive quarter, suggesting that it might not deter additional rate cuts. Market sentiment anticipates a 25 basis point rate reduction at the RBNZ's upcoming policy meeting in May, with rates potentially reaching a low of 2.75% by the end of the year. Furthermore, the New Zealand currency felt the impact of a strengthened U.S. dollar, following Federal Reserve Chair Jerome Powell's remarks indicating that the Fed would await further economic data before deciding on interest rate adjustments.