New Zealand’s central bank on Wednesday announced the biggest interest rate hike and pointed to a more hawkish monetary tightening method in the coming months in an attempt to curb high inflation.
In January 2009, the Reserve Bank of New Zealand (RBNZ) raised the official cash rate (OCR) by 75 basis points to 4.25%, and also increased the projected peak for the cash rate to 5.5% in September 2023, which is expected to remain into 2024.
In a poll, fifteen of 23 economists had expected the central bank’s policy committee to raise the cash rate by 75 basis points. However, there was some disagreement on where the rate would peak and when should the central bank start cutting the rate next year
After the announcement of its biggest rate hike, the New Zealand dollar climbed 0.6% to $0.6178, moving close to its recent three-month highs of $0.6204.
New Zealand’s inflation is just below three-decade highs, while some economists expect the cash rate in the first half of next year could get to 5.25%.