Reserve Bank of New Zealand: 50bps rate hike for fourth straight meeting
2022-08-17
■New Zealand's central bank raised its policy rate from 2.5% to 3.0% at its
■monetary policy meeting on the 17th
With the economy slowing down, the NZ central bank will be forced to steer a tough monetary policy.
The Central Bank of New Zealand (NZ) (RBNZ) held a monetary policy meeting on the 17th. According to data from the Bureau of Statistics, the consumer price index (CPI) from April to June rose 7.3% year-on-year, an acceleration from the previous quarter (6.9%). The index hit its highest level in 32 years, driven by rising construction costs and rents. On the other hand, the unemployment rate fell by 0.1 percentage points month-on-month to 3.3%, the lowest level since statistics began in 1986. The CPI exceeded the central bank's target (1-3%) for five consecutive quarters due to tight labor supply and demand and a faster pace of wage growth. The July post-meeting statement said, "it is appropriate to continue monetary tightening at a pace that maintains price stability and supports maximum sustainable employment." The Reserve Bank of New Zealand has raised interest rates seven times. The policy rate fell from 2.5% to 3.0%.
The RBNZ will be forced to adopt a hawkish monetary policy if prices soar and interest rates rise, personal consumption slumps from the April-June quarter and the economic slowdown deepens. We also want to pay attention to the statement issued after the meeting on the 17th to see if we can get any clues about the policy guidance after October.