The Reserve Bank of New Zealand (RBNZ) hiked its key policy rate by 25 bps to 5.5%. Following the decision, the New Zealand Dollar slumped. Economists at ING believe that NZD/USD could test 0.61.

RBNZ may be done with tightening

“The RBNZ surprised markets with a dovish 25 bps hike. The decision to hike by 25 bps today was a close one (five to two vote split), and rate projections signal this is indeed the peak of the tightening cycle in New Zealand.” 

“NZD/USD fell sharply after the announcement, trading below 0.6200, and may test 0.6100 by the end of the week if USD momentum remains strong.”