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RBNZ Hike Triggers NZD Selloff: Market Reprices Expectations
The Reserve Bank of New Zealand (RBNZ) raised its policy rate by a quarter point to 2.75% on Wednesday, but the New Zealand Dollar (NZD) fell almost 1.7% in response.
This is because the market had been pricing in a longer tightening cycle than what was actually announced, with rate markets carrying around 95 basis points of further tightening out to the middle of 2027.
The central bank's projections showed no more than one further quarter point before year end, against a market that had been running a considerably longer ladder into 2027.