New Zealand’s central bank signaled it will pause its interest-rate increases amid benign inflation and a currency it said is at an “unjustified and unsustainable” level. The kiwi fell.
“It is prudent that there now be a period of assessment before interest rates adjust further toward a more-neutral level,” Reserve Bank of New Zealand Governor Graeme Wheeler said in a statement released in Wellington after increasing the official cash rate by a quarter-percentage point to 3.5 percent. “The economy appears to be adjusting to the monetary policy tightening that has taken place since the start of the year.”
Falling business confidence, slowing house-price inflation and a plunge in milk-powder prices give Wheeler scope to pause after raising borrowing costs four times since March 13. He was the first central banker from a developed nation to raise official interest rates this year, fueling gains in the nation’s currency. A pause would mean steady borrowing costs ahead of the general election on Sept. 20.