NZD/USD slid despite RBNZ’s interest rate decision

The NZD/USD pair slid Wednesday to 0.0052 -0.75% despite the Reserve Bank of New Zealand lifted its benchmark rate to 0.5% from a record-low 0.25% and signaled more increases over the next year, as it seeks to tame inflation stoked by higher oil prices, rising transport costs and supply-chain disruptions.

The RBNZ said the increase would also drive up mortgage rates and so help cool house prices, up about 30% over the past year.

New Zealand largely kept out Covid-19 by closing to the outside world, a policy accompanied by stimulus to keep the economy moving.

Now the resulting labor shortages and surging demand, notably for housing, have led it to become one of the first developed economies to raise interest rates since the pandemic began.