The New Zealand dollar was little changed after Reserve Bank deputy governor Geoff Bascand told a Sydney conference the central bank may have to cut rates further, halting a rally sparked by higher-than-expected inflation figures.

The kiwi was trading at 62.70 US cents at 5pm in Wellington from 62.80 cents at 7:55am. The trade-weighted index was at 69.81 points from 69.84.

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Data today showed consumer prices rose 0.7 per cent in the September quarter, taking headline inflation to 1.5 per cent, above the 0.6 per cent quarterly increase economists had forecast and the 0.5 per cent outcome the central bank had expected.

The figures pushed the local currency as high as 63.19 cents.

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But then Bascand told a Citi Australia conference on New Zealand investment that "lower rates still may be needed to achieve our inflation and maximum sustainable employment objectives."

"That took the gloss off the kiwi," says Mark Johnson, private client manager at OMF.

The deflating currency also reflected economists' views that the data won't deter the Reserve Bank from cutting its official cash rate at the next monetary policy committee meeting on Nov. 13.

ASB economist Mark Smith says the sectoral inflation model RBNZ watches held steady at 1.7 per cent in the September quarter.

"We believe a combination of domestic and global catalysts will require additional policy support to keep NZ inflation comfortably within the 1-3 per cent band," Smith says.

The downbeat mood was reinforced by Westpac's chief economist in Australia, Bill Evans, coming out with a prediction that the Reserve Bank of Australia will cut its cash rate again in February.

RBNZ's OCR currently stands at 1 per cent while the RBA's cash rate is at 0.75 per cent.

"The kiwi and the Aussie are struggling to sustain their gains," OMF's Johnson says.

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As if the market needed further reasons to look on the gloomy side, China has threatened to retaliate if the US Congress passes legislation requiring an annual review of whether Hong Kong is sufficiently autonomous from Beijing to justify its special trading status.

Protests in Hong Kong against Chinese control have entered their fifth month.

The New Zealand dollar was trading at 93.10 Australian cents from 93.01 and was unchanged at 49.15 British pence. It was at 56.83 euro cents from 56.94, at 68.13 yen from 68.37, and at 4.4485 Chinese yuan from 4.4478.

The two-year swap rate edged up to a bid price of 0.8814 per cent from 0.8732 yesterday while the 10-year swaps rose to 1.2800 per cent from 1.247