WELLINGTON, March 13 (Reuters) - The Reserve Bank of New Zealand said on Thursday that it expected any rise in the domestic currency to be subdued as the central bank begins its monetary tightening cycle, as market participants were well aware that rates will rise.
“Most institutional investors are anticipating this sort of tightening, so therefore we’re not expecting to see significant exchange rate increases as a result,” RBNZ Governor Graeme Wheeler told a media conference.
He said the bank was ready to make adjustments to its intended policy if inflation pressures looked to be stronger than expected.
Wheeler was speaking after the central bank raised its official cash rate by 25 basis points to 2.75 percent, its first rise since mid-2010, as it tries to quell inflation pressures in an outperforming economy. (Reporting by Naomi Tajitsu)