RBNZ Hikes OCR to 2.75%, NZD Dives 1.1% Amid Dovish Guidance

The New Zealand dollar declined by 1.1% after the Reserve Bank of New Zealand (RBNZ) increased the Official Cash Rate (OCR) to 2.75%. The RBNZ raised the OCR by 25 basis points, bringing it in line with expectations.

Market analysts were focused on the guidance provided by the RBNZ rather than the rate hike itself. Kiwibank described the statement as 'clearly dovish' despite high market expectations for a more aggressive move.

The RBNZ forecasts inflation will remain above its 1%-3% target range through 2026, with headline inflation projected to stay above 4%. The bank expects inflation to fall within the target range by mid-2027.