"This was far more dovish than everyone in the market was thinking - we've called it aggressively neutral - it smacks you in the face with how neutral they were, they say everything that's happened in February was neutral for monetary policy," said Phil Borkin, an economist at ANZ Bank New Zealand. "We've seen the currency sink one big figure (1 US cent) on the back of it, and it's stayed there."
The Reserve Bank lowered its projected track for the TWI, with the prospect of future interest rate hikes by the Federal Reserve reducing the kiwi's interest rate differential with other currencies, and deputy governor Grant Spencer told politicians the US dollar component of those assumptions meant the New Zealand dollar would probably be in the low-60s US cents level.
Two-year swap rates fell 8 basis points to 2.26 per cent and 10-year swaps declined 4 basis points to 3.38 per cent.
ANZ's Borkin said the bank expects the kiwi to decline as the interest rate differential with the US continues to shrink with the Fed raising rates, but would fare differently on the cross-rates with New Zealand's relatively positive economic outlook.
In other data today, food prices fell in April as cheaper grocery items offset increases in vegetable prices.
The local currency dropped to 93.02 Australian cents from 93.70 cents. The kiwi declined to 4.7167 yuan from 4.7627 yuan and fell to 78.02 yen from 78.51 yen. It decreased to 62.86 euro cents from 63.35 cents and fell to 52.86 British pence from 53.28 pence.