New Zealand Lifts Interest Rate by Half-Point

The Reserve Bank of New Zealand has raised its benchmark interest rate by 0.5% points, reflecting an increasingly aggressive approach from central banks around the world, as inflation has been at high levels for decades. This is the fourth consecutive increase and the largest in more than 20 years.

The bank also lifted the cash rate to 1.5% from 1.0%, which follows quarter percentage point increases at each of its October, November and February meetings. Central banks around the world have been aggressive in efforts to stop inflation, exacerbated by the war in Ukraine, which has pushed up fuel and food prices.

Federal Reserve has also indicated a raise interest rates by a half percentage point at their May 3-4 meeting. Expectations for a large rate increase handed after US consumer prices rose 8.5% from a year earlier in March, due to increasing food and energy prices, supply constraints and strong consumer demand.

Consumer prices in New Zealand rose 5.9% year-on-year in the October-December quarter of last year, accelerating from 4.9% in the previous quarter. ANZ predicts that this year's consumer price inflation rate will exceed 7.0%, compared to the central bank's target range of 1.0% to 3.0%.