Official Cash Rate: Dollar tumbles as Reserve Bank holds OCR at 2.75% in split decision
The Reserve Bank of New Zealand unexpectedly held the Official Cash Rate at 2.75% in a split 4-3 decision. The move caused the New Zealand dollar to drop as markets had largely anticipated a 25 basis point hike.
Why it matters
The decision highlights the central bank's cautious approach to balancing inflation control against concerns over a weak economic recovery.
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Reserve Bank Governor Anna Breman voted in favor of the hold. Photo / NZME
The New Zealand dollar took a tumble when the Reserve Bank of NZ kept rates on hold at 2.75% in a split decision.
Economists expected a 25 basis point increase, and markets had priced in a 90% chance the Reserve Bank of NZ (RBNZ) would hike.
The NZ dollar (NZD) fell to US55.87c shortly after the decision versus US56.78c just prior.
“The hold is a surprise given how the backdrop shifted after September: oil prices rebounded, the New Zealand dollar weakened, and the September-quarter CPI [Consumers Price Index] showed price pressures broadening even as headline inflation eased,” Moody’s Analytics economist Sunny Nguyen said.
The Monetary Policy Committee voted four to three to hold the Official Cash Rate (OCR).
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