RBNZ Rate Hike Leaves NZ Dollar Reeling

The Reserve Bank of New Zealand (RBNZ) raised interest rates by 25 basis points to 2.75% on Wednesday, but its projection for further tightening was more gradual than expected.

Markets had priced in a faster pace of rate hikes and a top around 3.5%, but the RBNZ's forecast shows rates reaching only 2.81% by December and 3.15% at the end of 2027.

The New Zealand dollar (NZD) slid 0.7% to $0.5893 in response, while the Australian dollar (AUD) held steady after data showed the economy grew 0.4% in the second quarter, beating forecasts of 0.3%.