New Zealand hikes interest rate to 4.25% to fight inflation

[andhra_jp]

It's the first time the bank has raised rates by more than a half-point since introducing the Official Cash Rate in 1999.
The new rate is the highest in New Zealand since early 2009.

New Zealand's inflation rate is currently 7.2 per cent, well above the bank's target of 1 per cent to 3 per cent.
The nation's unemployment rate is 3.3 per cent.

The bank also sharply revised upwards its projected peak for its benchmark rate, which it now expects it to reach 5.5 per cent next year before it decreases.
It predicted a sharp rise in unemployment next year and for the economy to dip briefly into a shallow recession.

New Zealand Reserve Bank Governor Adrian Orr had a message for consumers.

"Think harder about your spending. Think about saving rather than consuming, I know that's a strange concept," he said.

He said inflation was 'no-one's friend' and that a small recession might be needed to get it down.

"Because the New Zealand economy is starting from a position of very high inflation and acute labour shortages, an economic contraction is likely," the RBNZ said in a statement.

During a parliamentary hearing on Wednesday, New Zealand's Finance Minister Grant Robertson said the world economy faced a "year of reckoning" in 2023.

"Countries will either be in recession or feel like they are," Mr Robertson added.

https://www.bbc.com/news/business-63725212