WELLINGTON, New Zealand – The Reserve Bank of New Zealand raised its benchmark interest rate by 50 basis points for the second consecutive meeting and predicted a higher interest rate while central banks globally they try to stifle inflation.
The RBNZ rate hike on Wednesday raised the cash rate from 1.5% to 2.0% and followed a similar increase in April.
The central bank predicted that the cash rate would reach 3.4% by the end of this year and 3.9% in the April-June quarter of 2023. It had previously forecast that the cash rate would reach 2.2%. the last quarter of this year and peak at around 3.4% in 2024.
The monetary policy committee “agreed that stabilizing inflation is its priority,” the RBNZ said in a summary of the minutes of the meeting.
“Members agreed that increasing the OCR (official cash rate) more and more was consistent with avoiding higher future costs for employment and the economy as a whole as a result of high inflation.” says the statement.
The central bank began raising interest rates in October last year, after about 18 months of keeping its cash rate at an all-time low of 0.25% in response to the pandemic. the Covid-19.
The RBNZ is conducting its most aggressive hardening cycle in a generation, reflecting the challenges posed by a broad monetary and fiscal stimulus, tight global supply chains and high prices of energy and other commodities after the invasion of Ukraine by Russia.
New Zealand consumer prices rose 6.9% year-on-year in the January-March quarter, the largest increase in three decades.