Official exchange rate climbs to 3% in latest attempt to curb inflation
The Reserve Bank raised the official interest rate by 50 basis points to 3% this afternoon.
This is the fifth time the official exchange rate (OCR) has been raised this year, after seeing previous increases in February, April, May and July.
This is the seventh consecutive time the Reserve Bank has opted for a rate hike and today’s hike was anticipated.
With fierce competition among banks, it’s unclear if the latest hike will have an immediate impact on mortgage rates.
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In a statement on Wednesday afternoon, the Reserve Bank said the increase was necessary to “maintain price stability and contribute to maximum sustainable employment.
“Underlying consumer price inflation remains too high and labor resources remain scarce.”
The ongoing Covid-19 pandemic and the war in Ukraine were also factors in the decision.
“The outlook for global growth continues to weaken, reflecting the continued tightening of global monetary conditions.”
However, spending levels in New Zealand were a bright spot in the report.
“Domestic spending has remained resilient to global and local headwinds so far.
“Spending levels are supported by robust employment levels, continued fiscal support, strong terms of trade and healthy household balance sheets overall.”
It comes as Reserve Bank data shows there was about $6 billion in new residential mortgages in June, up from $8 billion in the same period last year.