The New Zealand Dollar dipped to US$0.7204 on Thursday, after the Reserve Bank announced that it would increase the Official Cash Rate by 25 basis points.

Alan Bollard, Reserve Bank Governor on Thursday said that OCR would be boosted on a very reasonable rate in comparison with the estimations made in the June statement by the Bank. He also said that the recent increase in the Kiwi Dollar is not consistent.

According to Mike Jhones from the Bank of New Zealand, these statements hit the sales and led to the poor market conditions for RBNZ. The two-year trading rates closed down by 10 basis points and in the case of 10-year trading, a fall of 5.5 basis points was noticed. He also said that NZ Dollar won’t be low for a long time; in fact, it may hike in one day only.

After these announcements of Bollard, Government bonds were reported to be stronger.

Market experts are expecting that the bank would not increase the bank rate this year; however, there were few, who expected that in September, the Bank would raise the bank rate by 25 basis point.

Earlier, last year the Official cash rate was determined at 2.5% in order to make the economic conditions favourable. This year in June, Mr. Bollard had said that the OCR would be increased above 5%.