RBNZ sees cash rate staying at 5.5 until mid2024
NZ dollar slumps 1 after rate hike
Economists see policy statement as dovish

WELLINGTON, May 24 Reuters New Zealand39;s central bank on Wednesday signalled it was done tightening after raising rates by 25 basis points to the highest in more than 14 years at 5.5, ending its most aggressive hiking cycle since 1999.

The Reserve Bank of New Zealand39;s RBNZ indication the official cash rate OCR would now be on hold defied market expectations that it might forecast further hikes and sent the New Zealand dollar down 1.25.

The big surprise was leaving the OCR forecast unchanged. It says they39;re done hiking, said Imre Speizer, head of new strategy at Westpac. So that is a major surprise.

He added the statement was very dovish.

The RBNZ forecasts the official cash rate to peak at its current level of 5.5 but will need to remain at the restrictive level until at least the middle of 2024 to ensure inflation returns to a target band of 1 to 3, according to the monetary policy statement MPS accompanying the rate decision.

A frontrunner among its peers in withdrawing pandemicera stimulus, the RBNZ has remained singularly focused on curbing inflation, lifting rates by 525 basis points since October 2021. This has been its most aggressive policy tightening streak since the official cash rate was introduced in 1999.

RBNZ Governor Adrian Orr said at a media conference that there were signs higher interest rates were already…