New Zealand Surprises With Rate Cut, Sending Kiwi Sharply Lower

The Reserve Bank of New Zealand surprised the markets Thursday with a rate cut, its first since 2011, sending the nation's currency sharply lower. The quarter-point reduction took the RBNZ's benchmark official cash rate to 3.25%, marking a turning point from the central bank's recent tightening of policy. Both Dow Jones Newswires and Reuters cited the market pricing a 40% chance of easing ahead of the decision, even as New Zealand faces its lowest inflation in more than a decade. The move sent the New Zealand dollar falling almost two U.S. cents to an intraday low of 70.15 cents, its weakest level since September 2010, according to Reuters. In remarks accompanying the decision, RBNZ Gov. Graeme Wheeler said that the central bank "expect[s] further easing may be appropriate. This will depend on the emerging data."