WELLINGTON: New Zealand's central bank lifted interest rates for the third time this year on Thursday, saying the hike was needed to contain inflation.
The Reserve Bank of New Zealand raised the official cash rate (OCR) 0.25 points to 3.25 percent in a move that was widely expected in financial markets.
In March, New Zealand became the first advanced economy to tighten monetary policy since 2012, ending a three-year freeze.
Reserve Bank governor Graeme Wheeler said inflationary pressures were set to increase and further OCR rises may be needed to keep price rises close to the bank's target of 2.0 percent.
"In this environment, it is important that inflation expectations remain contained and that interest rates return to a more neutral level," he said.
"The speed and extent to which the OCR will need to rise will depend on future economic and financial data, and its implications for inflationary pressures."
The bank kept rates low for three years to cushion the impact of the devastating Christchurch 2011 earthquake, which claimed 185 lives and flattened much of the South Island city.
But with a NZ$40 billion ($34.5 billion) rebuilding programme stimulating the construction sector and farm exports to China booming, Wheeler has repeatedly spoken of the need to move rates to a "neutral" setting.
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