The Reserve Bank of New Zealand decided to keep interest rates unchanged at 5.5%, as was expected at the bank’s meeting that was held this morning, Wednesday, August 16th, to keep interest levels at their highest levels in 14 years.

The interest statement stated that the current level of interest rates limits spending and thus pressures inflation. Accordingly, the committee believes that interest rates need to remain at these levels for a period of time in order to ensure that inflation returns to the target range of 1/3%.

The New Zealand economy is developing on a large scale as expected, and the lack of equity continues with the decline in aggregate demand, as inflation and expectations have decreased, although core inflation continues to rise.

The inflation rate fell to 6% in the second quarter of this year, which ended in June, with the decline in inflation in commercial goods, and the bank expects inflation to drop to the target range by the second half of 2024.

With regard to the future of interest rates, the bank expects interest rates to be at 5.54% by the end of this year and to be at 5.5% by the end of next year, up from 5.43% in previous estimates.