New Zealand hikes interest rates again

WELLINGTON, Apr 24 (AFP): New Zealand's central bank lifted interest rates for the second time in as many months on Thursday, saying it was necessary to contain inflation as an economic recovery gains momentum.

The Reserve Bank of New Zealand raised the official cash rate (OCR) 0.25 points to 3.0 per cent in a well-flagged move that was widely anticipated by market watchers, who predict rates will hit 4.5 per cent by the end of next year.

The hike comes after New Zealand last month became the first advanced economy to tighten monetary policy since 2012, ending a three-year freeze when the benchmark rate rose to 2.75 per cent from a record low of 2.5 per cent.

Reserve Bank governor Graeme Wheeler said New Zealand's farm-based economy "has considerable momentum" and grew an estimated 3.5 per cent in the year to March, fuelled by high commodity prices and a strong housing market.

As a result, Wheeler said inflationary pressures were increasing and action was needed to keep price rises within the bank's 1.0-3.0 per cent target range over the next two years.