NZ signals intense monetary tightening
New Zealand's central bank on Wednesday delivered its seventh straight interest rate hike and signalled a more hawkish tightening path over coming months to rein in stubbornly high inflation.
The aggressive tone of the Reserve Bank of New Zealand's (RBNZ) statement warning of future hikes being brought forward caught some traders by surprise, lifting the local dollar and sending swap rates higher.
The RBNZ raised the official cash rate (OCR) by 50 basis points to 3.0 per cent as expected, a level not seen since September 2015, and crucially, it now sees rates at 4.0 per cent by early next year, compared to a previous projection of 3.7 per cent.
Wednesday fourth straight 50-bps hike, along with earlier smaller increases that lifted the cash rate from a record low of 0.25 per cent in October, marked the most aggressive tightening by the central bank since 1999.
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