New Zealand’s central bank stepped up its inflation-fighting rhetoric and signaled it will start raising interest rates in the first half of next year as the economy strengthens. The currency rose.
“The bank will increase the official cash rate as needed in order to keep future average inflation near the 2 percent target midpoint,” Reserve Bank of New Zealand Governor Graeme Wheeler said in statement in Wellington today after leaving the benchmark at a record-low 2.5 percent. In October, he said increases “will likely be required” in 2014.
New Zealand is set to become one of the first developed nations to begin raising borrowing costs as accelerating economic growth and a housing boom stoke price pressures. Given the outlook for faster inflation, (NZCPIYOY) “it is becoming unnecessary to maintain the current degree of monetary stimulus,” the central bank said today.