By REBECCA HOWARD WELLINGTON—The New Zealand dollar was trading higher late Thursday after the Reserve Bank of New Zealand kept the Official Cash Rate on hold at 2.5% but Governor Graeme Wheeler was viewed as more hawkish than expected in his first statement since taking up the post last month. While the market wasn't expecting Mr. Wheeler to change the rate, "there was still a certain amount of nervousness out there and also the risk that recent poor inflation data and the general slowdown of the economy and the high Kiwi dollar would lend him toward being a little bit more dovish," Chris Hunter, Western Union's business solutions corporate dealing manager, said. However, that wasn't the case and the "market responded accordingly," he said. Among other things, the market immediately picked up on the inclusion of the words "for now" in Mr. Wheeler's statement that "for now it remains appropriate for the OCR to be held at 2.5%." The inclusion of "for now" was "widely perceived as a hawkish NZD-positive inclusion, suggesting that the cash rate may not remain lower for longer after all," said Annette Beacher, TD Securities' head of Asia-Pacific Research. The New Zealand dollar was buying around US$0.8221 at 0401 GMT, versus US$0.8128 late Wednesday. The Kiwi was buying A$0.7935 versus A$0.7879. The April 2015 bond was 6 basis points lower at 2.515%, while the April 2023s ended up 2.5 basis points at 3.586%. A local bond trader said the market pulled back "some but not all" of its expectations for a rate cut after the Reserve Bank statement was viewed as hawkish. He said there is still around 18 basis points of easing priced in over the next 12 months.

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