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RBNZ May Pause Until December 2014

New Zealand’s central bank lifted its official cash rate by 25 basis points to 3.50 percent as expected on Thursday, but then suspended its rapid-fire run of interest rate rises to study their impact on the economy.

It was the Reserve Bank of New Zealand’s fourth consecutive rise in as many policy meetings, taking the rate from 2.5 percent in March to July’s 3.5 percent.  “It is prudent there now be a period of assessment before interest rates adjust further to a more-neutral level,” RBNZ Governor Graeme Wheeler said in a statement.

He said rates would still need to rise in the future, but the economy was feeling the impact of its previous tightening, with commodity prices falling, and inflation moderate.  Consumer price inflation ran at an annual rate of 1.6 percent in the second quarter, Statistics New Zealand said last week, below the 1.8 percent annual pace forecast in a Reuters survey.

Reuters [1]

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