New Zealand's central bank raised interest rates on Thursday and signaled that it would keep tightening monetary policy in the coming months as the central bank tames inflation pressures which have been brewing as the country's economy strengthens.
The Reserve Bank of New Zealand lifted its official rate by 25 basis points to 3.0 percent in a widely expected move, continuing its tightening path mapped out last month, when the central bank took the lead among developed nations in raising rates in the current cycle.
"It is important that inflation expectations remain contained. To achieve this it is necessary to raise interest rates towards a level at which they are no longer adding to demand," RBNZ Governor Graeme Wheeler said in a statement.
"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 pressures."
Thursday's move takes rates to a three-year high, and the RBNZ stuck to its guidance that more rate hikes lay ahead, while adding that it would assess the extent to which a historically strong New Zealand dollar lowers inflationary pressures.