Economic Buzz: New Zealand Central Bank Raises Key Rate By Record 75 Bps

23 Nov 2022 , 11:09 AM

New Zealands central bank hiked its benchmark rate by a record 75 basis points and signaled more tightening despite looming recession. The Monetary Policy Committee of the Reserve Bank of New Zealand decided to raise the Official Cash Rate to 4.25 percent from 3.50 percent. The bank has tightened its monetary policy by 400 basis points over the last nine consecutive meetings. The current OCR level is the highest since January 2009. In order to bring inflation back to the target, the committee said the interest rate needs to reach a higher level, and sooner than previously suggested. The central bank expects inflation to return to within the 1 to 3 percent target band in the second half of 2024, and to 2 percent by the end of the projection. The economy is forecast to enter a recession in 2023. The peak to trough decline in the level of GDP is estimated to be about 1 percent.Powered by Commodity Insights