The New Zealand dollar edged down against the greenback today despite a hawkish Monetary Policy Statement from the Reserve Bank this morning.
As expected Reserve Bank governor Alan Bollard kept the official cash rate unchanged at 6.75 per cent, but maintained a hawkish tone in his accompanying statement.
Dr Bollard said future rate hikes could not be ruled out as he projected inflation would rise above the bank's target of 1-3 per cent, nudging 4 per cent, on the back of rising oil prices.
Shortly after the RBNZ announcement the kiwi enjoyed a brief rally up to the session's high of US71.10c. But it lost traction as the day wore on, ending up at US70.63c at 5pm down from US70.72c at the same time yesterday.
BNZ currency strategist Sue Trinh said much of the hawkishness of Dr Bollard's statement had already been priced into the kiwi in the lead up to today's announcement.
"It was a case of buy the rumour, sell the fact I think," she said.
In his statement Dr Bollard said he took no account of plans by both the Labour and National parties to loosen fiscal policy after the election.
He said the shape and economic impact of post-elections policies was "not clear at this point".
The bank based its decisions on policy as announced by Treasury and it would "not be appropriate to second-guess fiscal policy outcomes following the upcoming election".
A Reuters poll conducted after the rate announcement showed all but one of 13 economists expected rates to remain on hold at the next rate review on October 27.
- NZPA
<EM>Currency:</EM> Kiwi falls against greenback despite hawkish RBNZ
AdvertisementAdvertise with NZME.