New Zealand inflation hits 32-year high
Statistics New Zealand said in a statement on the same day that the above figure exceeded the first quarter's 6.9% increase and was the largest increase since the 7.6% increase in the second quarter of 1990.After the data was released, investors predicted that the country's central bank, the Reserve Bank of New Zealand, may raise interest rates more than expected in August, and the New Zealand dollar rose.
The Reserve Bank of New Zealand announced on the 13th that it would raise the benchmark interest rate by 50 basis points to 2.50%, the sixth consecutive rate hike since October 2021 and the third consecutive rate hike by 50 basis points since April this year. The central bank also released a report that it will strive to control inflation within a target range of 1% to 3%.
Reuters reported that most economists had previously forecast that the Reserve Bank of New Zealand could raise interest rates by 50 basis points next month. However, with second-quarter CPI data showing a stronger-than-expected increase in inflation, the RBNZ could follow other advanced economies by then and raise interest rates higher.
In June, the U.S. Federal Reserve raised interest rates by 75 basis points, the largest single rate hike since 1994. On the 13th of this month, the Bank of Canada raised interest rates by 100 basis points. The move makes Canada the first G7 member to raise rates so sharply in this economic cycle.
After the release of New Zealand's latest CPI data, ANZ predicted that the New Zealand central bank is very likely to raise interest rates by 75 basis points in August, "especially when the labor market data released on August 3 conveys more unexpected hawkish signals."
Westpac wrote in a research report that the sharp rise in New Zealand's CPI was mainly due to rising food, petrol and housing prices.