Kiwi Economy Sees Rate Hike and Signs of Growth

The Reserve Bank of New Zealand (RBNZ) has raised the official cash rate from 2.5% to 2.75%, a move that was expected but still has implications for the country's economy.

New Zealand's exports have been performing well due to strong global demand for meat and dairy, but fuel import prices have taken a toll on the country's terms of trade, which plummeted by 9% in recent months.

The construction industry is showing signs of life after nine quarters of year-on-year decline, with growth in building work put in place reaching its strongest level since September 2022 in the June quarter of this year.

The RBNZ's decision to raise interest rates is aimed at returning inflation to target without plunging the economy into an even deeper downturn. The bank's Governor has expressed a preference for waiting and seeing, rather than rushing to make further rate hikes.