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Kiwi Dollar Misses Rally of Peers as Inflation Expectations Drop

  • RBNZ said price expectation gauge lowest in almost 22 years
  • Currency drops against all but one of its 16 major peers

New Zealand’s dollar dropped after the nation’s central bank said a gauge of inflation expectations plunged to its lowest level in almost 22 years, bolstering speculation that policy makers will have to cut interest rates.

The kiwi weakened against all except one of 16 major peers as a quarterly survey of businesses published on the Reserve Bank of New Zealand’s website showed two-year ahead inflation expectations fell to 1.63 percent from 1.85 percent. That’s the lowest since the second quarter of 1994 and well below the 2 percent midpoint of the central bank’s 1-3 percent target range.