The Reserve Bank of New Zealand (RBNZ) continued to act aggressively in the fight against inflation by raising interest rates by 50 basis points at its August policy meeting.
With a half basis point increase for the fourth time in a row, it puts current interest rates at 3.0%, a level not seen in 7 years.
The RBNZ expects inflation to ease slightly in the near term following falling fuel prices and stable shipping costs.
However, the central bank emphasized that inflation levels will only return to the RBNZ's target range by mid-2024 and more monetary tightening is needed.
Interest rates are seen to reach around 3.69% by the end of this year, rising to 4.1% in September and December 2023, and 3.65% in September 2025.
This shows that New Zealand's central bank is still committed to continuing tightening to ease the price pressures that are plaguing the market.
Meanwhile, the RBNZ said that economic demand had been resilient throughout the first half of 2022, but output was constrained by disrupted global supply, labor shortages and the Covid-19 outbreak.
The kiwi dollar jumped higher as soon as the results were announced before paring back gains to trade at 0.63400 against the USD.
Governor Adrian Orr in a follow-up statement said the RBNZ was not predicting a recession but saw growth coming in below expectations.
