Interest money

New Zealand raises interest rates to pre-pandemic levels | Money

In a widely expected move, the Reserve Bank of New Zealand’s base rate rose 0.25 percentage points to 1.0%, following similar increases in October and November. —Photo Reuters

WELLINGTON, Feb. 23 — New Zealand’s central bank raised its base interest rate to pre-pandemic levels on Wednesday in a bid to contain inflation from 30-year highs.

In a widely expected move, the Reserve Bank of New Zealand’s base rate rose 0.25 percentage points to 1.0%, following similar increases in October and November.

The latest hike reverses a 0.75% cut introduced to stave off a virus-induced recession as the pandemic swept the world in March 2020.

The bank’s top priority has now shifted to tackling inflation and it has announced further hikes to come as annual price rises approach 6%, levels not seen since 1990.

“It remains appropriate to continue to reduce monetary stimulus in order to maintain price stability and support as many sustainable jobs as possible,” he said.

“The level of global economic activity is generating mounting inflationary pressures, exacerbated by ongoing supply disruptions.”

He said oil prices and transportation costs were fueling inflation, but were expected to stabilize within the bank’s 1.0-3.0% target range “over the next few years.” -AFP