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NZIER Monetary Policy Shadow Board calls for rate hike

Contributor:
Fuseworks Media
Fuseworks Media

NZIER’s Monetary Policy Shadow Board recommends the Reserve Bank takes the Official Cash Rate from 3.00 percent to 3.25 percent on Thursday.

"There is solid support from the Shadow Board for lifting rates on Thursday. That would make for three hikes on the bounce since March" said Dr Kirdan Lees, Principal Economist at NZIER.

"The domestic economy is strengthening and is taking more regions and industries along for the ride. More businesses are investing and hiring additional staff. Inflation pressures are building, but only slowly."

Right now, interest rates need to move higher. But risks from the flying Kiwi, Auckland’s housing market and a slowing Chinese economy mean future rate increases are less assured.

This round the Shadow Board’s average recommended interest rate is 3.15 percent, up from 2.95 percent in the April round six weeks ago.

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