New Zealand’s central bank raises benchmark interest rate to 5.50% and expects this to be the peak NZD/USD falls 1%

Original title: The New Zealand central bank raised the benchmark interest rate to 5.50% and expected this to be the peak New Zealand dollar fell 1% against the US dollar

The Reserve Bank of New Zealand raised interest rates by 25 basis points and said it had done enough to curb inflation. The bank’s forecasts show that the official cash rate (OCR) will not rise any further and will start to fall from the third quarter of 2024.

“The repairs and rebuilding facing key parts of the North Island due to recent severe weather events will support economic activity, particularly the construction sector,” the Reserve Bank of New Zealand said in a statement after its Wellington policy meeting on Wednesday. “Broader government spending is expected to will decline on an inflation-adjusted basis. The Committee believes that with interest rates remaining at restrictive levels for some time, consumer price inflation will return to within the target range of 1% to 3% per annum, while supporting maximum sustainable employment.”

The Reserve Bank of New Zealand expects the cash rate to peak at 5.5%, with rate cuts expected to begin in the third quarter of 2024. The New Zealand dollar fell 1 percent against the U.S. dollar.

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