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NZ RAISES INTEREST RATES

  1. Grant62

    4,667 posts.
    It appears that the NZ Reserve Bank has this morning followed suit and raised NZ interest rates for the 2nd time this year.

    The new Official Cash Rate is 5.5% (up 25 Basis Points).

    The NZ/RB has also flagged further rises over the coming 12 months.

    According to this morning's statement:
    1)
    "demand conditions no longer warrant the degree of interest rate stimulus that seemed necessary late last year"; and
    2)
    the NZ economy's "ability to meet increasing demand without pressure on costs, margins and therefore prices appears limited".

    The NZ-RB has also flagged that a more aggressive increasing rate regime is on the cards noting, in its statement, that "further increases in interest rates will be required over the year ahead, possibly to a greater extent than we projected in March".

    This, however, may be a reflection on NZ's current inflationary outlook which is at the top of the 2-3% band allowed for under the RB's operating charter.

    On a global front, the RB noted that:
    1)
    recovery is occurring in global demand;
    2)
    fragile in part; and
    3)
    consensus forecasts are now more optimistic than previously (ie: the outlook is gathering pace).


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