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As rising inflation encourages rate hike bets, the New Zealand dollar increases by 1%.

The third quarter’s inflation rate was above estimates, which increased predictions that the central bank will raise interest rates again this year. The New Zealand dollar rose on Tuesday as a result.

The New Zealand dollar increased 1.2% to an almost two-week high of $0.5700. Just after the consumer price index for the third quarter came in far higher than anticipated, its gains were triggered.

In New Zealand, the CPI increased 7.2% on an annualized basis in the three months ending September 30. This is higher than the 7.3% increase seen in the previous quarter and the predicted 6.6% increase. As a result of supply chain interruptions, increased gasoline and food prices, and price increases, the reading stayed close to 32-year highs.

Also, CPI inflation went up 2.2% from the previous quarter, which was more than the 1.6% increase that was expected.

As one of the first global central banks to start tightening policy in the wake of the COVID-19 outbreak, the Reserve Bank of New Zealand has increased interest rates at a record rate since last year.

Analysts think that the bank may raise interest rates by 75 basis points in November. This would bring interest rates in the Australian economy to 4.25 percent, which is their highest level since right after the 2008 financial crisis.

Since the RBNZ started a tightening cycle in late 2021, interest rates have been increasing for a full year. If November’s increase goes as planned, interest rates will have gone up by a huge 4% in just one year. This would be the biggest jump in the history of the country.

Until at least mid-2024, the Reserve Bank does not anticipate that inflation will fall within its target range of 1% to 3%. The bank is probably lagging in its fight against inflation, according to Tuesday’s inflation data.

Similar to the majority of developed nations, New Zealand is suffering from soaring inflation as a result of the COVID-19 epidemic. Local price pressure has also been caused by the rising cost of commodities, which has been caused by problems in the supply chain and the situation between Russia and Ukraine.

But a strong job market and the continued boost to the economy from COVID-era stimulus measures have also made inflation go up this year.

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