RBNZ raised rates to 2.75%
As widely expected, the RBNZ lifted the Official Cash Rate (OCR) from 2.5% to 2.75%. New Zealand dollar jumped to the highest since April 2013 on the news as New Zealand has become the first developed nation to exit record-low interest rates cycle.
Central bank also said it plans to remove stimulus further in 2014 to fight inflation. Inflation forecasts were raised today. The RBNZ expects to hike the key rate by about 2% over two years, with the pace depending on economic data, Governor Wheeler said.
“With inflation now rising and inflationary pressures building, there is a need to return interest rates to more-normal levels,” the bank said in its policy statement. “The speed and extent to which the cash rate will be raised will depend on economic data and our continuing assessment of emerging inflationary pressures.”