Bank of New Zealand raises interest rates by 0.5% and signals further hikes to curb inflation

The Reserve Bank of New Zealand (RBNZ) raised its policy rate for the seventh consecutive time on August 17, signaling that it will accelerate its aggressive monetary tightening in the coming months to counter a sharp rise in inflation.

The RBNZ raised its key interest rate by 0.50% to 3.0%, the highest level since September 2015, and predicted that rates will reach 4.0% early next year, up from its previous forecast of 3.7%.

New Zealand inflation reached a 30-year high of 7.3% in the second quarter of 2002, even as the RBNZ accelerated the end of stimulus measures in place during the coronavirus pandemic and New Zealand’s key interest rates rose sharply from a record low of 0.25% last October.

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