Reuters reports that the Reserve Bank of New Zealand (RBNZ)  delayed raising rates as policymakers quickly shifted gears after the country was put into a snap COVID-19 lockdown over a handful of new cases, but the bank still expects a hike before year-end.

The RBNZ held the official cash rate at a record low of 0.25% despite the economy running red-hot and a majority of analysts expecting a hike. Some had said Governor Adrian Orr may even deliver a 50 basis point rate hike.

However, New Zealand's first local COVID-19 infection in six months, and a snap lockdown ordered for the entire nation on Tuesday hosed down those expectations and forced policymakers to confront the risk of a potentially premature move now.

A hike would have made New Zealand the first both in the Asia-Pacific and the G10 currency block to raise rates in the pandemic era.

RBNZ projections showed policymakers still expect to raise rates over coming months, with the cash rate seen at 0.50% by the end of the year, 1.5% by mid next year and over 2% by end of 2023. Markets are now pricing a 60% chance of a hike in October

Governor Orr told reporters at a press conference that the bank's clear direction is to be reducing monetary stimulus and lifting the cash rate.