New Zealand Raises Benchmark Interest Rate for Two Consecutive Months

[Asia Economy Reporter Kwon Jae-hee] The Reserve Bank of New Zealand raised its benchmark interest rate once again following the increase in October.

According to Bloomberg on the 24th (local time), the Reserve Bank of New Zealand decided at its final monetary policy committee meeting of the year to raise the benchmark interest rate by 0.25 percentage points (25bp) to 0.75%.

Previously, the Reserve Bank of New Zealand had raised the benchmark interest rate by 0.25 percentage points for the first time in over seven years in October.

The Reserve Bank of New Zealand stated, "Considering inflationary pressures, rising housing prices, and the historically low unemployment rate, we decided to raise the interest rate," and suggested the possibility of implementing monetary tightening at a faster pace than previously forecast to curb inflation.

Adrian Orr, Governor of the Reserve Bank of New Zealand, said, "At this meeting, we discussed various options including a 0.5 percentage point rate hike, but judged that a 0.25 percentage point increase is the best course of action at this time."

In a previously released report, the Reserve Bank of New Zealand projected that the benchmark interest rate would rise to 2.5% in 2023 and indicated the possibility of further rate hikes in 2024.

Ben Dudi, an economist at Capital Economics, said, "Considering New Zealand's currently overheated economic situation, the central bank is expected to continue raising the benchmark interest rate, likely reaching around 2.0% by mid-next year."

New Zealand's inflation rate reached 4.9% in the third quarter, the highest in 10 years, while the unemployment rate stood at 3.4%, matching the historic low recorded in December 2007.

Meanwhile, ahead of the central bank's rate decision, the New Zealand government announced that it will gradually reopen its borders starting early next year, after having closed them due to COVID-19.

This content was produced with the assistance of AI translation services.