The Reserve Bank of New Zealand raised interest rates by 75 basis points, the largest in the central bank’s history.

The Reserve Bank of New Zealand (RBNZ) increased the benchmark interest rate by 75 basis points, stating that higher interest rates are needed to meet inflation and employment targets.

According to RBNZ’s statement, the benchmark interest rate increased from 3.50% to 4.25%. Market expectations were that interest rates would increase at the announced rate.

Thus, the interest rate has been increased by 400 basis points since the record low of 0.25 percent in October 2021.

Arguing that annual inflation is still very high at 7.2 percent, RBNZ said, “High inflation is due to a mix of local and international factors. Indicators point to inflation to remain high in the near term.” was said.