New Zealand's central bank raises key interest rate to 5.5% but signals next move will be a cut
New Zealand’s central bank has raised its benchmark interest rate to 5.5% but signaled its next move would be a cut, sparking a sell-off in the currency
WELLINGTON, New Zealand (AP) — New Zealand's central bank raised its benchmark interest rate again Wednesday to 5.5% but signaled its next move would be a cut, sparking a sell-off in the currency.
Wednesday's quarter-point rate rise was the 12th straight hike imposed by the Reserve Bank of New Zealand since October 2021. But for the first time since the tightening cycle began, the bank projected the next move would be a cut, which would likely come later next year.
The projection was more dovish than markets had expected and caused the New Zealand dollar to drop by more than 1% to trade at a little below U.S. 62 cents.
Like many central banks around the world, the Reserve Bank of New Zealand has been raising rates to try and tame inflation, which in New Zealand has fallen from a recent peak of 7.3% last June to 6.7%.
