The Reserve Bank of New Zealand raised interest rates by 25 basis points to reach 5.5% from 5.25%, as expected at the bank’s meeting that took place this morning, Wednesday, May 23, to keep interest levels at their highest levels in 14 years.

The interest statement stated that inflation is still very high, but interest rates may have peaked at current levels of 5.5%, raising market expectations that the bank will stop tightening monetary policy in the coming period.

The committee discussed economic developments and the contraction of economic activity in New Zealand by 0.6% in the fourth quarter of last year, which was unexpected.

The committee expects the economy to record negative growth in the second and third quarters of this year, after achieving 3% growth in the first quarter.

The annual inflation rate in the consumer price index is less than expected in February, as it fell to 6.7%, while members expressed their satisfaction with the current and future path of interest rates and the appropriateness of keeping them at current levels.

The New Zealand dollar reacted negatively, falling by about 100 points against the US dollar, and is now trading at 1.6143 levels.