New Zealand's central bank raises interest rates by 25 basis points to combat inflationary pressures
New Zealand's central bank raised its key interest rate for the first time in three years, signaling it wants to shift to a less stimulating policy environment as inflationary pressures emerge. The central bank's Monetary Policy Committee raised the official cash rate by 25 basis points to 2.5% on Wednesday, in line with the expectations of 16 of 22 economists surveyed by Bloomberg, with the remaining six predicting to keep interest rates unchanged. The Monetary Policy Committee unanimously agreed to make the above policy decision. The New Zealand Bank of New Zealand said in a statement after the meeting, "With inflation remaining above target and economic activity expected to strengthen, further tapering of monetary stimulus may be needed. Future official cash rate decisions will depend on incoming data, price-setting behavior and how the strength of economic activity affects medium-term inflationary pressures." The New Zealand dollar continued to rise after the decision was announced and is currently trading at $0.5701.