How NZ Dollar Reacted to a Rate Cut

The chance of a rate cut was about 50-50 though the final decision, reducing the interest rate by 0.25 percent, interpreted as a surprise. Consensus in economic calendars was for no change, but in one hour to the decision, I searched related news in Bloomberg and I found a useful article reflecting the possibility of a rate cut as soon as this meeting.

The statement shows that further rate cuts are to come; "Provided that the outlook for inflation continues to improve and there is no excessive exchange-rate depreciation, we would expect to lower rates further", RBNZ's Alan Bollard said.

However, the first reaction was far less than what I expected from such event. It may be because that the current 8.0 percent interest rate is still attractive enough to limit the negative effects.