Reserve Bank governor Graeme Wheeler lifted the official cash rate for the second time in as many months, saying non-tradable inflationary pressures were “becoming apparent” in an economy that’s picking up pace and he’s watching the impact of a strong kiwi dollar on import prices.
“Spare capacity is being absorbed and inflationary pressures are becoming apparent, especially in construction and other non-tradable sectors,” Wheeler said in a statement.
He lifted the OCR 25 basis points to 3 percent, saying interest rates need to be at a level where they don’t add to demand so as to keep inflation expectations contained.
“The speed and extent to which the OCR will be raised will depend on economic data and our continuing assessment of emerging inflationary pressures, including the extent to which the high exchange rate leads to lower inflationary pressure,” he said.
Interest rates hiked to 3pc – Property – NZ Herald News.