Cost of living: New Zealand steps up fight against persistent increase in prices of commodities.



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Living expenses: The central bank of New Zealand has increased its efforts to combat rising prices by raising its key interest rate to the highest level in more than 13 years.
The key interest rate set by the Reserve Bank of New Zealand (RBNZ) was raised by 0.75 percentage points to 4.25 percent.
Since the official cash rate was introduced in 1999, that was the largest increase.
In the three months leading up to the end of September, the country’s annual inflation rate was 7.2%.
As the global economy emerges from the pandemic and the war in Ukraine has pushed up the cost of fuel and food, New Zealand, like much of the rest of the world, has seen the cost of living rise sharply.
The most recent forecasts from the RBNZ also indicated that the nation’s economy would enter a recession in September of next year.When an economy shrinks for two three-month periods—or quarters—in a row, it is typically considered to be in a recession.
The RBNZ stated in a statement, “Because the New Zealand economy is starting from a position of very high inflation and acute labor shortages, an economic contraction is likely.”
“Attempting to prevent an economic contraction by limiting future interest rate increases would probably result in a longer period of high inflation.To bring inflation and employment back to a more sustainable path, this would likely necessitate higher interest rates and a larger contraction,” it added.
“Strategy is not hope.That is evident, and the RBNZ Monetary Policy Committee ought to be commended for confronting the difficulties head-on.They’ll change their minds if the facts change.However, “dithering would only make the problem worse right now, the fact is that high inflation is looking increasingly entrenched,” ANZ Research stated in a note to investors.
Grant Robertson, the Finance Minister of New Zealand, stated that the global economy would face a “year of reckoning” in 2023 during a parliamentary hearing on Wednesday.
Mr. Robertson went on to say, “Countries will either be in recession or feel like they are.”
The New Zealand dollar reached a three-month high against the US dollar following the RBNZ interest rate announcement before easing slightly.

Samuel Alexander

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