Most market commentators had expected Reserve Bank governor Graeme Wheeler to hold the official cash rate at its current rate of 3.5% for the foreseeable future.
But Mr Wheeler caught everyone by surprise yesterday in the last sentence of his news release.
''In the current circumstances, we expect to keep the OCR on hold for some time. Future interest rate adjustments, either up or down, will depend on the emerging flow of economic data,'' he said.
BNZ economist Stephen Toplis said the January OCR review was the Reserve Bank's most proactive attempt yet to get the currency down.
In removing its tightening bias and opening the door to the possibility of a rate cut, markets had, unsurprisingly, driven the dollar lower and started to fully price in a rate cut.
The focus on the currency was reinforced by an entire paragraph dedicated to highlighting the dollar's overvaluation and the Reserve Bank's statement: ''We expect to see a further significant depreciation,'' Mr Toplis said.
''We misjudged the Reserve Bank's risk preferences. We also think they have taken a premature gamble with the housing market.''
There were clear signs the housing market was again taking off with house sales up 8% in the December quarter 2014 compared with year earlier levels.
Traditionally, that would result in an acceleration in house price inflation.
The central bank was bargaining on the recent increase as being a transitory development as house sales bounced back from a weak period before last year's election, he said.
There might be some truth in that but with excess demand clearly in evidence, and very high migration continuing unabated, it was hard to see much of a softening.
Banks were already competing aggressively in the mortgage market by cutting fixed rates, in particular.
''The Reserve Bank has today poured petrol on the fire and has almost guaranteed further - potentially significant - declines in mortgage interest rates,'' Mr Toplis said.
Craigs Investment Partners broker Chris Timms said the fall in the dollar was spectacular. Before Mr Wheeler's statement, the dollar was trading at US74.46c. Immediately after the statement, the dollar was US73.80c and two hours later, it had fallen more than US1c.
Mr Timms said the combination of the United States Federal Reserve signalling a rate rise this year, Mr Wheeler's statement about a move ''up or down'' for the OCR and economists speculating about a OCR cut pushed the dollar down.
''I wouldn't be surprised to see the dollar continuing down to about US70c.''
The falls against the currencies of other trading partners were less steep. It dropped to a seven-week low of A92.50c from A93.39c. Markets were already pricing in a 40% chance of a rate cut when before, most had expected the OCR to stay flat.
In his statement, Mr Wheeler said headline inflation was expected to below the Reserve Bank's 1-3% target band through this year and could become negative for a time before moving back to the midpoint of 2% - albeit more gradually than previously anticipated.
The US central bank repeated it would be patient in deciding when to raise benchmark borrowing costs from zero, but also acknowledged a fall in some inflation measures.
After a two-day meeting of the Federal Open Market Committee, there was an upbeat tone taken on the US economy's prospects and the committee held to the view energy-led weakness in inflation would dissipate.
