The Reserve Bank of New Zealand (RBNZ) raised interest rates by 50 basis points to 1.5% at its meeting this morning on Wednesday from 1% as the committee agreed that it is appropriate to continue tightening monetary policy at a better pace to maintain price stability.

In the interest statement, the bank stated that inflationary pressures are still high and exacerbated with the Russian invasion of Ukraine and the rise in commodity and energy prices.

The Bank of New Zealand raises interest rates at this pace for the first time in 22 years, which reflects the strong concerns about global inflation hikes.

The New Zealand dollar rose against the US dollar in the initial reaction to test levels of 0.6895 before retreating and is now trading at 0.6812 levels.