New Zealand hikes interest rate to 4.25% to fight inflation

By NICK PERRY
Associated Press

WELLINGTON, New Zealand (AP) — New Zealand’s central bank has hiked interest rates by a record amount as it tries to get inflation under control. The Reserve Bank of New Zealand increased its benchmark rate by three-quarters of a point to 4.25%. It’s the first time the bank has raised rates by more than a half-point since introducing the Official Cash Rate in 1999. The new rate is the highest in New Zealand since early 2009. The bank also sharply revised upwards its projected peak for its benchmark rate, which it now expects to reach 5.5% next year. The bank also predicted a sharp rise in unemployment next year and for the economy to dip into recession.