New Zealand’s central bank raised interest rates by 50 basis points to a more than 14-year high of 4.75% on Wednesday, and said it expects to keep tightening further as inflation remains too high, a hawkish signal that sent the local dollar surging.
The Reserve Bank of New Zealand (RBNZ) said it was too early to assess the policy implications of the recent devastating cyclone and floods in the country’s North Island, and expects to look past the short-term price pressures stemming from the “extreme weather events”.
The RBNZ continues to expect the official cash rate (OCR) to peak at 5.5% in 2023, according to the monetary policy statement (MPS) accompanying the rate decision. That would mark the most aggressive policy tightening streak since the official cash rate was introduced in 1999.
“While there are early signs of price pressure easing, core consumer price inflation remains too high, employment is still beyond its maximum sustainable level, and near-term inflation expectations remain elevated,” the central bank said in a statement.
This report’s information was first seen on REUTERS; to read more, click this link.
