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This week, the Reserve Bank of New Zealand is expected to raise interest rates by the largest amount ever in an effort to reduce inflation. Following this, the central bank is anticipated to take a three-month hold from monetary policy meetings.
The annual inflation rate in New Zealand is 7.2%, the pace of wage growth is at an all-time high, and inflation expectations have not changed.
Michael Gordon of Westpac NZ stated that there is a real threat of an inflationary spiral for the central bank. To get back in control of inflation, interest rates will need to be significantly higher.
Since October, the authority has increased interest rates by 325 basis points, and the central bank's emphasis is still solely directed at keeping inflation under control.
source: bloomberg.com
The annual inflation rate in New Zealand is 7.2%, the pace of wage growth is at an all-time high, and inflation expectations have not changed.
Michael Gordon of Westpac NZ stated that there is a real threat of an inflationary spiral for the central bank. To get back in control of inflation, interest rates will need to be significantly higher.
Since October, the authority has increased interest rates by 325 basis points, and the central bank's emphasis is still solely directed at keeping inflation under control.
source: bloomberg.com
