The Reserve Bank of New Zealand has raised its benchmark interest rate on Wednesday by half a percentage point. This is the fourth consecutive increase and the largest single increase in more than 20 years. The move reflects increasingly aggressive approaches by central banks around the world as inflation is currently at multi-decade highs. The inflation has been exacerbated by the war in Ukraine and increase in prices for food and fuel.
The cash rate in New Zealand has been raised from 1.0% to 1.5% after a quarter percentage-point increase in October, November and February. Canada’s central bank is expected to also announce a half-percentage point increase in its policy decision to be released on Wednesday. The last time the Reserve Bank of New Zealand raised its benchmark by half a percentage point was in May of 2000. Capital Economics expects the benchmark rate to be raised to 3.0% by the end of this year.
