The Kiwi depreciated against the US Dollar after the Reserve bank of New Zealand announced its monetary policy decision. The NZD/USD exchange rate dropped 40 base points or 0.55% to enter the 0.7220 area.
The Central Bank of New Zealand kept its key interest rate unchanged at 1.75% and stated that volatility seen in the equity market this week provided warning signs that markets globally were nervous about higher interest rates and the risk of an increase in inflation. While keeping rates steady, the RBNZ lowered its inflation forecasts for until 2020, signalling investors should not fear the stimulus withdrawal for a long period of time, as the consumer price growth target of 2% was seen hard to achieve in the near-term.
