The Reserve Bank has said it is pausing to assess the impact of its four consecutive interest rate hikes so far this year. New Zealand stands out from most other developed countries where interest rates remain at record lows and investors will be looking to the central bank's Sept. 11 monetary policy statement for guidance on whether future interest rate hikes may proceed at a slower pace.
"The pace of their OCR rises was probably not merited," said Bancorp's Cavanaugh. "They are going to be slower to neutral than expected."
A stronger US dollar overnight also weighed on the kiwi after better than expected US housing data buoyed optimism about a pickup in the world's largest economy. US housing starts jumped 15.7 percent to a seasonally adjusted annual 1.09 million unit pace in July, beating the 969,000 rate expected by economists in a Reuters poll.
The New Zealand dollar was little changed at 90.50 Australian cents from 90.45 cents yesterday ahead of testimony from Reserve Bank of Australia Governor to a parliamentary committee today.
The local currency was little changed at 63.20 euro cents from 63.24 cents yesterday and at 86.63 yen from 86.64 yen. The kiwi advanced to 50.66 British pence from 50.51 pence yesterday ahead of the release of the Bank of England minutes from its last meeting.
