The Reserve Bank of New Zealand announced that it raised the interest rate by a quarter point (25 basis points) to reach 0.50% at its meeting in the Asian session on Wednesday, October 6th, as expectations were and as we mentioned in our report on the link. Will the Reserve Bank of New Zealand raise interest rates? (Movement scenarios for the New Zealand dollar) – Fayez Al-Ajmi (fayezalajmi-4x.com)

The Monetary Policy Committee of the Reserve Bank of New Zealand stressed that it is appropriate to continue reducing monetary stimulus levels to maintain a low inflation rate and support maximum sustainable employment, as the Committee believes that inflation may rise to levels of 4% in the near term due to high oil prices and high transportation costs before It stabilizes at about 2% over the medium term.

The Committee recognizes that the lockdown restrictions caused by the outbreak and spread of the new delta strain have adversely affected some companies in Auckland and a range of the service industry and will have long-term effects on economic activity.

So, the Reserve Bank of New Zealand became the first bank of the major economic banks around the world to raise interest rates if we exclude South Korea, which raised interest rates at the end of August. The bank is expected to continue raising interest rates until they reach 1.5% levels, but it depends on future moves on Medium-term inflation and employment expectations.

The New Zealand dollar, as we mentioned in the above report, moved negatively after the statement, due to the fact that the interest rate hike by a quarter point was calculated in the prices, to trade at 0.6923 levels against the US dollar.