The central bank's hawkish stance saw a number of economists revise their expectations, predicting it would increase the official cash rate
The Reserve Bank of New Zealand said the committee needed to increase the cash rate if it is to return inflation to its target of 1%-3%.It added it expects to see a continued slowing in domestic demand and a moderation in core inflation and inflation and the extent of this moderation will determine the direction of future monetary policy decisions.
It also noted upside risks to inflation from the severe weather earlier this year and government spending, and raised concerns about a possible fall in lending rates.The RBNZ, among the first global central banks to withdraw pandemic-era stimulus, has pursued one of the most aggressive tightening cycles around the globe. Wednesday's decision comes in sharp contrast with theThe New Zealand dollar bounced 1% to touch a two-month high of $0.6383 before standing 0.73% firmer at $0.6351.