The New Zealand dollar fell to around $0.578, retreating from a more than two-month high, after the Reserve Bank signaled it is likely to keep the official cash rate unchanged for some time. Governor Anna Breman said this outlook assumes economic conditions evolve as expected. She added that the forward path published in the November Monetary Policy Statement still indicates a slight probability of another rate cut in the near term, while noting that financial conditions have tightened more than projected. This dampened expectations for a rate hike, which markets had been pricing in from the third quarter next year. Breman said the economy is broadly tracking the RBNZ’s expectations and inflation is on course to reach the 2% target by mid-2026. Losses were somewhat limited by ongoing softness in the US dollar after the Federal Reserve signaled a less hawkish path than markets had anticipated.
