New Zealand Central Bank Holds Rate But Signals Possible Hike
New Zealand's central bank kept its benchmark interest rate at 2.75 per cent, surprising markets. Governor Allison Breman said further tightening is likely at future meetings, and discussed the risk that a sustained fall in the New Zealand dollar could fuel imported inflation.
The Reserve Bank of New Zealand held its benchmark interest rate at 2.75 per cent, a decision that surprised financial markets. Central bank governor Allison Breman said the bank may need to adopt tighter policy in the future.
Speaking at a press conference after the rate decision, Breman said it was likely the bank would raise rates further at future meetings, depending on the economic outlook. She noted that the central bank's policy committee had discussed the depreciation of the New Zealand dollar at this meeting, and said that if the decline continued, it could worsen imported inflation.
The central bank had raised rates by 0.25 percentage points at both its July and September policy meetings. Following the decision to hold rates steady, the New Zealand dollar came under pressure, falling more than 1 per cent against the United States dollar to NZ$0.561 per US dollar.