Source: Reuters
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  • The Reserve Bank of New Zealand has lifted interest rates by 50 basis points to two per cent, amid mounting pressure to curb inflation
  • The central bank has been aggressive in its tightening of monetary policy, with this rate hike forming the fifth in a row
  • It has flagged the likely probability of cash rates climbing to almost four per cent by the second half of next year
  • This is well above its target range of between one to three per cent and has been exasperated by the Ukraine war supply chain disruptions

The Reserve Bank of New Zealand has lifted interest rates by 50 basis points to two per cent, amid mounting pressure to curb inflation.

The central bank has been aggressive in its tightening of monetary policy, with this rate hike forming the fifth in a row.

It has flagged the likely probability of cash rates climbing to almost four per cent by the second half of next year.

It comes as the central bank attempts to reign in on inflation, which is expected to peak at seven per cent in the June quarter of this year.

This is well above its target range of between one to three per cent and has been exasperated by supply chain disruptions triggered by the Ukraine war.

The committee has argued large and swift increases will provide more flexibility in the future and reduce the risk of persistent inflation.

The move was in line with analysts expectations, but the shift still pushed the New Zealand dollar to a three week high.

One Australian dollar will currently buy NZ$1.09.

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