The RBNZ delivered its fourth consecutive half a percentage point rate rise, lifting the cash rate to 3 per cent and forecasting a peak rate of 4.1 per cent.
The Reserve Bank of New Zealand upgraded its peak cash rate forecast to 4.1 per cent after conceding inflation will not return to its target range until 2024.on Wednesday, lifting the cash rate to 3 per cent. The decision was widely expected by financial markets and economists.The New Zealand dollar firmed following the revisions to the monetary outlook, and NZ government bond yields also advanced. The Australian dollar dropped 0.3 per cent against the Kiwi, trading around $NZ1.10.
Ms Zollner described the overall tone of the policy assessment as “hawkish”. She also noted that the RBNZ discussed the possibility that the neutral cash rate, or the point at which monetary policy is neither restrictive nor accommodative, may be higher than realised. The central bank has pressed on with its aggressive approach despite signs that its rapid interest rate increases are beginning to cool the economy.The effect has started to show up in economic data, with business confidence slumping, and two-year inflation expectations falling for the first time since mid-2020.
Meanwhile, New Zealand’s jobless rate rose to 3.3 per cent in the second quarter, from a record low of 3.2 per cent in the first three months of the year.
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