December 3, 2021

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New Zealand is at the forefront of the world’s monetary tightness, which has grown with its first rate hike in seven years

The delta variation continues to affect New Zealand, with restrictions on movement in and around Auckland. However, due to rising concerns about rising property prices and inflation in general, the central bank’s mission to support the economy in that context has taken a back seat.

In this way, the Reserve Bank of India (RBNZ), Which is considered one of the benchmarks of the Central Bank of Chile, was determined to raise its interest rate by 25 basis points to 0.5% during Wednesday’s session, qualifying as the first increase in seven years.

Milestone will be the starting point of a process to reduce cash expansion as the company progresses rapidly. “Further removal of the monetary policy stimulus is expected over time, and future movements will depend on the medium-term outlook for inflation and employment.”, He held a Release He was released after a two-day meeting.

New Zealand has been at the forefront of reducing stimulus from developed countries, where only Norway has taken this step, increasing by the same amount to 0.25% on 23 September. “The default economy now suggests that it is appropriate to begin a gradual normalization of the policy ratio,” the governor said. Bank of Norway, Østein Olsen.

Meanwhile, emerging markets are already advancing more firmly in these ways. Chile, Brazil, Colombia, Peru, Mexico, South Korea and Russia have taken that step. The last to join the group is emerging Eastern European, Poland, which raised rates on Wednesday for the first time in nine years.

The increase from a historic low of 0.1% to 0.5% is precisely explained by the rise in prices. “Inflation in Poland has risen to 5.8% year-on-year, according to Poland’s preliminary estimates for September 2021,” the report said. National Bank of Poland.

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Commenting on this, they elaborated, “Global inflation in energy and agricultural raw materials, factors beyond the control of the national monetary policy, caused the previous rise in electricity prices more than a year ago. Prices and waste disposal fees, as well as hassles. In global supply chains and international transport.

As for New Zealand, RBNZ says that “global economic activity continues to recover” due to both monetary and financial stimulus and the improvement of the vaccine. In this framework, “although economic uncertainty continues to be high, due to the major impact of Govt-19, pressure on spending is increasing, and some central banks have begun the process of mitigating monetary policy stimulus.”

More about Monetary politics

In this analysis of the global environment, a company led by Adrian O’Brien said that despite the economic downturn during the recent national blockade on health, the stabilization of the general balance of families and companies continued to support the fiscal year. The latest economic indicators support this panorama.

Adrian Orr, Governor of the Reserve Bank of New Zealand.

What is happening to the CBI in the definition of New Zealand monetary policy was largely due to the above. As mentioned in this connection, “The short-term rise in inflation is underscored by the rise in oil prices, rising transport costs and the impact of supply shortages.

Taking those factors into account, the New Zealand central estimate is that inflation will rise to 4% in the short term, from 3.3% in the second quarter, according to the latest official data released. That is, “before returning to the middle of the 2 percent in the medium term,” they argue.

For Norges Bank, inflation is still a major concern. However, they said in a statement that “increased activity and higher wages will help push inflation toward the 2% inflation target.” However, Norway expects a new rate hike in mid-November.

In the New Zealand challenge, Jason Wong, BNZ’s senior market strategist in Wellington, told Reuters that RBNZ’s commitment “is in line with everyone’s expectations.” He added, “We are moving towards a continuous tariff hike and the market has appreciated it.”

Josh Williamson, an economist at Citibank, shared his view, pointing out that they continue to expect “additional rate hikes to occur at 25 basis points rather than 50 basis point moves.”

Moving forward, news of monetary policy will continue. In early November it was the turn of the US Federal Reserve to announce its bond purchase reduction.