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The New Zealand Dollar depreciated against its major counterparts after the Reserve Bank of New Zealand (RBNZ) held rates unchanged in May as expected. The RBNZ defied market expectations at its policy meeting on Thursday, sending the country's currency to an 11-month low.

Inflation accelerated to 2.2 percent in the quarter, well above the RBNZ's projection of 1.5 percent. The first time since 2011 inflation had reached the midpoint of the central bank's target range. The bank's consumer price index forecasts show inflation falling back to the bottom of the 1-3 percent target band next year.

The RBNZ said that monetary policy will remain accommodative for a considerable period. The RBNZ forecasts that the average official cash rate will rise in the third quarter of 2019, but the markets were seeing this happening earlier.

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