(Bloomberg) -- The New Zealand dollar jumped after the central bank cut its benchmark interest rate to a record and said it expects that level should be low enough to meet its inflation target.
The kiwi rose to 67.30 U.S. cents at 9:35 a.m. Wellington time today, up 1.2 percent from before the Reserve Bank of New Zealand announcement. The bank cut the Official Cash Rate to 2.5 percent from 2.75 percent, as forecast by 15 of the 18 economists surveyed by Bloomberg.
Reserve Bank Governor Graeme Wheeler’s fourth rate cut of 2015 means he has fully unwound last year’s tightening. The central bank forecast inflation will hold below the 2 percent midpoint of its target range for a sixth straight year. Wheeler also said policy makers expect to achieve their goals at current interest-rate settings, although they are ready to reduce rates again if needed.
“The RBNZ cut interest rates but basically signaled that they’re done for the moment,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland. The central bank outlined “both upside and downside scenarios to the outlook for the economy; basically the whole message has been a little bit more balanced,” he said.