SYDNEY: The New Zealand dollar sagged on Wednesday after the country’s central bank disappointed those wagering on another hike in rates, while bond yields were swept to multi-year peaks by the selloff ravaging US Treasuries.

The decision by the Reserve Bank of New Zealand (RBNZ) to hold rates at 5.5% was fully expected by markets, but some had thought it would signal a bias to tighten further given upside risks to inflation.

While the central bank did acknowledge those risks, it stopped short of flagging further tightening and instead indicated rates would have to stay at their current restrictive level for a “more sustained period of time.”

“The bank appears content to wait for restrictive policy settings to fully feed through to the real economy,” said By Abhijit Surya, an economist at Capital Economics.

“We’re sticking with our view that, barring any major upside surprise in incoming data, the RBNZ’s tightening cycle is over,” he added.