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Reserve Bank of New Zealand Raises Official Cash Rate to 5.50% in Effort to Curb Inflation

Reserve Bank of New Zealand Raises Official Cash Rate to 5.50% in Effort to Curb Inflation

The Reserve Bank of New Zealand has increased the official cash rate (OCR) by 25 basis points to 5.50% as part of its ongoing efforts to reduce infla

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The Reserve Bank of New Zealand has increased the official cash rate (OCR) by 25 basis points to 5.50% as part of its ongoing efforts to reduce inflation. This move follows the latest data showing New Zealand’s inflation rate at 6.7%, slightly lower than the previous figure of 7.2%. It marks the 12th consecutive increase in the OCR. While this rise may negatively impact mortgage holders and those on floating rates, individuals with savings may benefit from higher interest rates. However, given the persistently high inflation, the increased returns on savings may not fully offset the higher cost of living. The Reserve Bank intends to maintain a restrictive OCR level to ensure inflation returns to the target range of 1% to 3% while supporting sustainable employment. The bank also noted that its measures to slow down house prices and consumer demand have been effective. Economists predict further rate hikes in the future, as the Reserve Bank aims to closely monitor the economy’s response.

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