New Zealand Interest Rate Hike

February 23, 2022

The 25-basis point hike in the Reserve Bank of New Zealands Official Cash Rate to 1.0% follows similar hikes last October and November and completes the reversal of the 75 basis points of pandemic easing engineered in mid-March 2020. A released statement leaves no doubt that considerable further monetary tightening will be necessary. By two years from now, the OCR is projected to be marginally above 2.5%. Consumer price inflation in New Zealand is targeted at 1-3% but soared from 1.4% in the final quarter of 2020 to a 30-year high of 5.9% one year later. The level of employment is now considered above a sustainable condition. Besides raising interest rates into restrictive territory, central bank officials are embarking on a gradual dumping of bonds acquired during the pandemic era.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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