NZ hikes key rates anew

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WELLINGTON- New Zealand’s central bank on Wednesday delivered its seventh straight interest rate hike and signaled a more hawkish tightening path over coming months to restrain stubbornly high inflation.

The aggressive tone of the Reserve Bank of New Zealand’s (RBNZ) statement warning of future hikes being brought forward lifted the local dollar and pushed swap rates higher.

The RBNZ raised the official cash rate (OCR) by 50 basis points to 3.0 percent as expected, a level not seen since September 2015, and crucially, it now sees rates at 4.0 percent by early next year, compared to a previous projection of 3.7 percent.

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“It remains appropriate to continue to tighten monetary conditions at pace to maintain price stability and contribute to maximum sustainable employment,” the central bank said in a statement.

The RBNZ also increased the projected peak for the cash rate to 4.1 percent where it expects it to remain into 2024.

“The overall tone of the policy assessment was hawkish. Inflation remains the focus,” ANZ bank economists said.

Markets were quick to price in the more aggressive outlook. – Reuters

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