New Zealand raises interest rates to 3%, highest level since 2015 | economy

New Zealand’s Reserve Bank on Wednesday raised interest rates to 3 percent from 2.5 percent, the highest level since 2015, in response to high inflation and labor shortages.

“The committee agreed that it is appropriate to continue to tighten monetary conditions at the pace necessary to maintain price stability and contribute to maximum sustainable employment,” the regulator said in a statement.

The move represents the seventh consecutive rise in rates and seeks to control inflation in the country, currently at 7.3 percent, the highest since 1990 and the pandemic due to pressure from the war in Ukraine, fuel prices and raw materials, as well as problems in supply chains.

According to the Reserve Bank of India report, the Ocean nation is experiencing labor shortages, exacerbated by Covid-19, while spending and investment outpace the ability to supply products, adding to wage pressures.

The regulator’s panel considered the possibility of continued tightening of monetary policy until it “believes that spending will be contained to return inflation to its target range of 1 to 3 percent” in the coming years.

According to market analysts, interest rates are expected to reach 3.75 percent by the end of the year and 4.25 percent by mid-2023.

The Reserve Bank of New Zealand began raising interest rates from October 2021, which was then 0.25 percent (an all-time low), by 0.25 percentage points, with the increase later revised to half a percentage point.

In 2015, interest rates in New Zealand reached 3 percent, although they were well below the highest rate ever recorded between 2007 and 2008, when they were set at 8.25 percent.