UPDATED 2.22PM:Â The Reserve Bank's being slammed for pouring petrol on the overheated housing market.
The central bank held the Official Cash Rate steady at 3.5 percent today, warning it was likely to stay at that level for the foreseeable future, and could go either up or down when it does eventually change.
BNZ head of research Stephen Toplis says the Reserve Bank is gambling that the benefits of driving down the New Zealand dollar will outweigh the cost of stimulating the housing market.
But he disagrees with the move, saying it's almost guaranteed more significant falls in mortgage rates, which will see housing demand spike even further.
The market's already reacting to an unexpected forecast from the Reserve Bank, with Deutsche Bank chief economist Darren Gibbs says the market's had a significant reaction.
"If you looked at swap rates we've seen a reasonable rally. We've seen markets price in almost a full chance of a rate cut over the next 12 months. Currency, we've seen the Kiwi Dollar fall by about a cent."
NZIER principal economist Kirdan Lees is expecting our currency will likely go up against currencies like the Euro.
"Certainly you've seen the New Zealand dollar depreciate against the US, but a little bit unclear when you look around the other trading partners," he says.
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