RBNZ Hike Sparks NZD/USD Sell-Off Amid Inflation Concerns

The Reserve Bank of New Zealand (RBNZ) hiked interest rates to 2.75% for the second consecutive meeting, narrowing the gap with the US benchmark rate.

Despite this move, the NZD/USD exchange rate continued its downward trend, reaching a low of 0.5835, down by over 2.6% from its August high.

New Zealand's inflation remains above the 2% target level, with the headline Consumer Price Index (CPI) rising to 4.1% in the June quarter, driven by elevated crude oil prices.

The RBNZ warned that weak income growth, job insecurity, and flat house prices are affecting household spending and residential investment in Auckland and Wellington.