The Reserve Bank of New Zealand decided, in its meeting this morning, Wednesday, in the Asian session, to raise interest rates by a quarter point, or 25 basis points, to become 1%, as expected.

In a statement, the bank stated that some economic turmoil is expected in the short term in light of the spread of Omicron and that inflation has exceeded expectations and the target range, but it will return in the coming years (the bank expects inflation to reach its peak in 2022) as coffee returns high inflation to high oil prices and high transportation costs .

The bank believes that it was agreed that there is a need for more monetary tightening than what was mentioned in the November statement, and the committee confirmed that it raised its expectations for the future of interest rates and that the higher interest is in line with the sustainability of housing prices and may drop further.

During today’s meeting, the members discussed whether the increase would be by 25 points or 50 points. When balancing the options, the committee reached a decision to raise it by a quarter of a point, and confirmed that it is ready for larger increases if necessary in the coming period.

The New Zealand dollar reacted positively to the statement, as the statement came more hawkish than before, to test 0.6773 levels against the US dollar.