The New Zealand dollar dropped by about a quarter of a US cent to US$67.83 on the back of the news.
Two-year government bond yields fell to 3.09 per cent from 3.14 per cent, and 10-year yields eased to 3.47 per cent from 3.51.
Westpac senior markets strategist Imre Speizer said the data was "slightly underwelming" because many had expected a bigger outcome, but that it poured cold water on what happens after May 25.
"We will end up with quite a fast-hiking path this year, but then next year it might not be as fast as the market thinks," he said.
"We think it will peak lower than where the market has priced it," he said.
The market puts the peak at 4 per cent.
Westpac predicts 3 per cent and the Reserve Bank forecasts 3.4 per cent.
Jarden's forecast is significantly lower than the market's - an official cash rate of 2.25 per cent by the end of this year.
ANZ strategist David Croy said the data took the wind out of the sails of the fringe argument for a 75-basis-point hike come May 25.
"I think the market can put that to bed now," he said.
Even though the number was lower than expected "to a person on the street it is still pretty worrying news".
"I don't think anyone would be comfortable with a 6.9 per cent inflation rate, but for the markets who were fearful of something higher, some kind of adjustment is appropriate today."
Jarden economist John Carran said inflation may come off more rapidly than many expect.
"While annual inflation will remain relatively elevated for the rest of this year due to the lower level of prices last year, incremental quarterly easing of inflation combined with increasing signs of softening in the New Zealand economy, could lead the Reserve Bank to take a more cautious approach in the second half of 2022," Carran said.