The Reserve Bank of New Zealand (RBNZ) board members decided to maintain the official cash rate (OCR) at 5.50% at its July monetary policy meeting, conforming to the market expectations.

Market reaction

In a slightly delayed reaction to the RBNZ announcement, NZD/USD dropped 20 pips to test the 0.6200 level. The pair is still up 0.30% on the day at 0.6214, as of writing.

NZD/USD: 15-minutes chart

Why the RBNZ decision matters to traders?

The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and an upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish.