The New Zealand Reserve Bank’s Monetary Policy Committee dropped a 50 basis point hike today by lifting the official cash rate to 1.5% from 1% Wednesday in Wellington, the first time it has delivered an increase of that magnitude since 2000, its biggest hike in 22 years.
So the question is, does the 50 basis point hike represent a stitch in time, or a nail in the coffin of the property market?
The move wrong-footed 15 of 20 economists who expected a quarter-point adjustment. However, investors had assigned it a 70% probability.
“The Committee agreed that their policy ‘path of least regret’ is to increase the OCR by more now, rather than later, to head off rising inflation expectations,” the RBNZ said. “It is appropriate to continue to tighten monetary conditions at pace.”
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