Thursday, July 31, 2014   

New Zealand begins rates tightening cycle
(03-13 09:41)

New Zealand today became the first advanced economy in the world to lift interest rates since 2012, ending a three-year freeze imposed after the devastating Christchurch earthquake.
The Reserve Bank of New Zealand raised the official cash rate by 25 basis points to 2.75 percent, saying it no longer needed to be kept at a record low because the economy's expansion “has considerable momentum.’’
Bank governor Graeme Wheeler signalled the rate rise would be the first of many, as the central bank looks to keep a lid on inflation and return the cost of borrowing to “normal'' levels.
“The bank's assessment is that the Official Cash Rate will need to rise by about two percentage points over the next two years for inflation to settle,'' he said.
He added: “The speed and extent to which the OCR will be raised will depend on economic data and our continuing assessment of emerging inflationary pressures.''—AFP

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