New Zealand Dollar Plunges on RBNZ Forward Guidance

The New Zealand Dollar slid to its lowest point in two weeks after the Reserve Bank of New Zealand raised its Official Cash Rate by 25 basis points to 2.75%.

This move was expected, but the bank's forward guidance that traders interpreted as more cautious than anticipated sparked a sharp selloff in the kiwi.

The central bank lowered its Q4 average OCR forecast and stressed that the future rate path was 'not pre-determined', which was seen as a disappointment by markets.

Core inflation excluding vehicle fuels had eased to 2.9%, well within the 1-3% target band, reducing urgency for accelerated hikes.