New Zealand raises rates to 5.50%, but suggests the end of the cycle of increases

New Zealand raises rates to 5.50%, but suggests the end of the cycle of increases

May 24. (EUROPE PRESS) –

The Monetary Policy Committee of the Reserve Bank of New Zealand has decided to raise the reference interest rate for its operations by 25 basis points, which will stand at 5.50%, its highest level since the end of 2008.

However, in the statement issued after the meeting, the entity has implied that with this twelfth consecutive rise in the price of money it puts an end to the current cycle of interest rate rises, which has increased the reference rate by 525 basis points since October 2021.

In this way, the projections of the New Zealand central bank contemplate keeping the reference rate at 5.5% until the third quarter of 2024, when they anticipate a drop in the price of money.

In their analysis, the members of the Committee appreciated a moderation in inflation and in expectations of price increases, as well as a slowdown in the growth of household spending, added to the moderation in global inflationary pressure.

In this sense, they expect inflation to continue to decline in the country and with it inflation expectations, although core inflation pressures will remain until capacity constraints ease further.

“The Committee agreed that the level of interest rates is constraining spending and inflationary pressure,” the New Zealand central bank said, stressing that the benchmark rate will need to remain at a restrictive level for the foreseeable future to ensure inflation returns. to the annual target range of 1% to 3%.

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