New Zealand's central bank lifts benchmark cash rate to 2.5%

New Zealand’s central bank has lifted its benchmark interest rate by half a percentage point to 2.5% as it attempts to curb inflation

New Zealand Economy (Copyright 2019 The Associated Press. All rights reserved.)

New Zealand’s central bank on Wednesday lifted its benchmark interest rate by half a percentage point to 2.5% as it attempts to curb inflation.

It was the third time this year that the Central Bank of New Zealand has lifted the cash rate by 50 basis points, following hikes in April and May. There was also a quarter percentage point rise in February.

The bank has forecast that the rate will peak at 4% late next year.

It said in a statement that it “remains appropriate to continue to tighten monetary conditions at pace to maintain price stability and support maximum sustainable employment.”

New Zealand's inflation is running at 6.9% and the unemployment rate is 3.2%.

The bank manipulates interest rates to try to contain inflation to a target band between 1% and 3%.

The bank will next consider raising the cash rate at its meeting on Aug. 17.