New Zealand Raises Key Rate Another Half-Point; Currency Gains
New Zealand raised interest rates by a half percentage point for a fourth straight meeting, underscoring the Reserve Bank’s status as a leading hawk in the global tightening cycle.
(Bloomberg) — New Zealand raised interest rates by a half percentage point for a fourth straight meeting, underscoring the Reserve Bank’s status as a leading hawk in the global tightening cycle.
The Monetary Policy Committee lifted the Official Cash Rate to 3% — a seven-year high that was unanimously forecast by economists — on Wednesday. It reckons the OCR will reach 3.69% at the end of this year and peak at 4.1% in the second quarter of 2023, higher and sooner than previously forecast.
“The committee agreed it remains appropriate to continue to tighten monetary conditions at pace to maintain price stability and contribute to maximum sustainable employment,” the RBNZ said in a statement. “Core consumer price inflation remains too high and labour resources remain scarce.”
The currency rose after the decision and traded at 63.68 US cents at 2:06 p.m. in Wellington.
New Zealand’s 2.75 percentage points of hikes in the past 10 months are the most aggressive tightening cycle it has delivered since pioneering inflation targeting more than 30 years ago. It currently exceeds the Federal Reserve and Bank of Canada’s 2.25 points apiece.