The central bank of New Zealand increased interest rates by 75 bps on Wednesday. To a level that is almost 14 years high.

New Zealand has experienced a substantial increase in the cost of living, much like the rest of the world.

The country’s economy will enter a recession in September of next year, according to the RBNZ’s most recent forecasts.

Why are Interest Rates getting so High in New Zealand ?

The RBNZ stated in a statement that “an economic contraction is likely” since New Zealand economy is entering from a situation of very high inflation and severe labour shortages.

Grant Robertson, the finance minister for New Zealand. Stated during such a parliamentary hearing at Wednesday that 2023 will be the “year of reckoning” for the global economy.

The New Zealand currency rose against the US dollar to a three-month high following the RBNZ interest rate announcements before slightly declining.

In a survey, 15 out of 23 analysts predicted the Reserve Bank of New Zealand (RBNZ) would raise interest rates by 75 basis points.