New Zealand's central bank surprised economists on Wednesday by imposing an aggressive half-point rate rise to bring its benchmark interest rate to 5.25%. It was the Reserve Bank of New Zealand's 11th straight rate hike as it tries to cool inflation, which is running at 7.2%, far above the bank's target level of around 2%.
WELLINGTON, New Zealand -
It was the Reserve Bank of New Zealand's 11th straight rate hike as it tries to cool inflation, which is running at 7.2%, far above the bank's target level of around 2%.New Zealand's benchmark rate is now among the highest in the developed world, and the bank's aggressive action stood in contrast to Australia's central bank, which on Tuesday decided to pause its round of rate hikes and leave its benchmark rate at 3.6%.
The Reserve Bank's Monetary Policy Committee said in a statement that inflation remained too high and too persistent while employment was beyond its maximum sustainable level, with the unemployment rate at a low 3.4%. "However, demand continues to significantly outpace the economy's supply capacity, thereby maintaining pressure on annual inflation," it said.
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