New Zealand Dollar Tumbles After RBNZ Policy Meeting

The New Zealand dollar slumped today, tumbling more than 1% against its most-traded peers, after the monetary policy statement released by the central bank turned out to be not so hawkish as market participants had expected.

The Reserve Bank of New Zealand left its main interest rate at 1.75% today, in line with expectations. The statement, while not necessarily dovish, was not as optimistic as economists had anticipated. In particular, RBNZ Governor Graeme Wheeler downplayed the acceleration of inflation in March, saying:

The increase in headline inflation in the March quarter was mainly due to higher tradables inflation, particularly petrol and food prices. These effects are temporary and may lead to some variability in headline inflation over the year ahead.

NZD/USD sank 1.4% from 0.6936 to 0.6841 as of 11:26 GMT today, and its daily low of 0.6816 was the lowest since June 2016. EUR/NZD climbed 1.5% from 1.5643 to 1.5872.

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