New Zealand dollar nosedives after RBNZ stuns market

New Zealand’s dollar weakened on Wednesday after the Reserve Bank of New Zealand kept its official cash rate at 2.75%, despite markets having fully anticipated a 0.25 percentage-point increase. The committee split 4-3 in favour of holding rates, while Governor Anna Breman said more tightening would eventually be required, with its timing dependent on incoming data.

The kiwi fell 1.2% against the US dollar to $0.5607, while the Australian dollar briefly gained 2% against it, reaching NZ$1.2602. In Australia, core inflation rose 1% in the third quarter and the annual rate reached 3.7%; markets then priced an 88% chance of an RBA rate increase at its November 3 meeting, up from 60% before the inflation data.