© Reuters.
Investing.com– The Reserve Bank of New Zealand kept interest rates steady on Wednesday as expected, with the bank stating that inflation still remained too high and that it could potentially hike interest rates further to quell price pressures.
The RBNZ held its (OCR) at 5.50% for a fourth straight month after having flagged an indefinite pause in its rate hike cycle earlier this year. The bank had raised the OCR by a cumulative 525 basis points between August 2021 and May 2023.
But Wednesday’s announcement marked a shift in the bank’s stance on an extended pause, as it warned that high interest rates had not pulled back demand by as much as expected.
“Ongoing excess demand and inflationary pressures are of concern, given the elevated level of core inflation. If inflationary pressures were to be stronger than anticipated, the OCR would likely need to increase further,” RBNZ Governor Adrian Orr said in a statement.
“Further slowing in spending growth is needed to reduce demand toward the economy’s ability to supply goods and services, to ensure that consumer price inflation returns to its target range.”
The bank’s rate hikes over the past…
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