PHOTO: New Zealand mortgage rates are set to skyrocket. FILE
The bank had flagged an ongoing tightening of monetary policy as inflation continued to ride high.
“Inflation is currently too high and employment is beyond its maximum sustainable level,” the RBNZ said in a statement. “The committee agreed to continue increasing the official cash rate (OCR) at pace to maintain price stability and support maximum sustainable employment.
“The committee considered whether to increase the OCR by 50 or 75 basis points at this meeting. Some members highlighted that a larger increase in the OCR now would reduce the likelihood of a higher peak in the OCR being required.
“Other members emphasised the degree of policy tightening delivered to date… On balance, the committee agreed that a 50 basis point increase was appropriate at this meeting,” the statement added.
The RBNZ has moved aggressively to curb local inflation, which was 7.3 percent in the second quarter of this year. The OCR is more than 10 times what it was this time last year. That 7.3 percent inflation figure exceeded the RBNZ’s peak forecast of 7 percent and was well above its target of between 1 and 3 percent.
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