New Zealand's central bank cut its benchmark interest rate on Thursday to match a record low of 2.50 percent and virtually shut the door on further easing, saying it expected to achieve its inflation target without more monetary stimulus.
The kiwi dollar jumped on the less dovish statement by Reserve Bank of New Zealand Governor Graeme Wheeler, who trimmed the Official Cash Rate by 25 basis points as expected, having left rates on hold at the previous meeting after three cuts.
The RBNZ is projecting annual inflation will rise back into its 1 to 3 percent range in the first quarter of 2016 and "we expect to achieve this at current interest rate settings, although the bank will reduce rates if circumstances warrant," Wheeler said.
The kiwi recovered from an initial dip to rise above $0.67.
"We thought 2.5 percent would be the bottom for rates and that's what the RBNZ is saying - which is why the kiwi jumped afterwards," said Michael Turner, Strategist, RBC Capital Markets.