New Reserve Bank governor Adrian Orr kept the official cash rate at 1.75 per cent and said the direction of the next move is equally balanced and could be up or down.
Its forecasts were downgraded with inflation seen returning to 2 per cent - the midpoint of the RBNZ's 1 per cent-to-3 per cent target range - in December 2020 versus a prior forecast of September 2020.
The RBNZ also predicts the OCR will rise to 1.9 per cent in December 2019, having previously forecast an increase in June 2019. A full rate increase is still signalled by March 2020 when the benchmark rate is forecast to be 2 per cent.
The kiwi "got smashed on that. There was also good data out of Canada overnight and higher oil prices are also very supportive for Canada. We are the cow economy and they are the oil economy," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.
Oil prices pushed higher after US President Donald Trump's move to pull out of the Iran deal and re-impose sanctions on the Middle East nation.
On the data front, the value of Canadian building permits rose 3.1 per cent in March, more than economists' forecasts for a gain of 2 per cent, on increased plans to build apartment buildings in the provinces of Quebec and British Columbia, the Globe and Mail reported.
The kiwi also fared badly against the Australian dollar after the RBNZ statement, falling to 92.48 Australian cents from 93.68 cents yesterday. Australia's economy is typically linked with hard commodities due to its iron ore exports.
Domestically, Kelleher said news the cattle disease Mycoplasma bovis is being detected on more farms "has got to be a concern for the currency as well."
Head of Biosecurity New Zealand Roger Smith told Parliament's primary production committee today that developments in the past six days had been a game changer in terms of the spread of the disease with confirmed infection in North Canterbury - a new region - and on a second North Island at near Pahīatua.
"I don't see how any of this is good for the gross domestic product or the economy," said Kelleher.
The local currency dropped to 4.3973 Chinese yuan from 4.4373 yuan yesterday and fell to 75.83 yen from 76.25 yen yesterday. It declined to 50.92 British pence from 51.46 pence yesterday and to 58.24 euro cents from 58.77 cents.
On a trade-weighted index basis it was at 72.44 from 73.13 late yesterday
New Zealand's two-year swap rate fell 6 basis point to 2.21 while 10-year swaps fell 4 basis points to 3.17 per cent.
