Wellington, November 23 (BNA): New Zealand’s central bank raised interest rates Wednesday by a record amount as it tries to control inflation.
The Reserve Bank of New Zealand raised its benchmark interest rate by three-quarters of a point, to 4.25%, reports the Associated Press.
It is the first time the bank has raised interest rates by more than half a point since the introduction of the official exchange rate in 1999. The new rate is the highest in New Zealand since early 2009.
New Zealand’s inflation rate is currently 7.2%, well above the Bank’s target of 1% to 3%. The unemployment rate in the country is 3.3%.
The bank also revised sharply upwards the expected peak for its benchmark rate, which it now expects to reach 5.5% next year before falling.
It predicted a sharp rise in the unemployment rate next year and the economy slipping briefly into a shallow recession.
The New Zealand dollar rallied after this news and was trading around 62 US cents.
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