The Reserve Bank of New Zealand (RBNZ) may hike rates by 25 basis points to head off inflationary pressures when it meets this Thursday, making it the first major central bank in the developed world to start normalizing monetary policy.
Official data on Jan. 21 showed the consumer price index rose 0.1 percent in the three months to Dec 31, confounding expectations for a 0.1 percent fall, and pushing the annual rate up to 1.6 percent – the highest since March 2012, Reuters reported. The central bank had forecast a fall of 0.2 percent.
“The risk of an early start to the RBNZ’s hiking cycle has clearly risen,” said Mansoor Mohi-uddin, head of foreign exchange strategy at UBS, after economic data showed “strong growth with higher-than-expected inflation, a firm manufacturing PMI (purchasing managers’ index) and buoyant consumer confidence.”
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