The New Zealand dollar marked advances against many of its major counterparts on Thursday following the Reserve Bank of New Zealand increasing interest rates for the second time in the past two months, according to Reuters.
Officials with the central bank said they intend to continue watching inflationary pressure while driving up interest rates to 3 percent from 2.75 percent. The body also noted continued interest rate hikes are likely.
"Future rate hikes, while tied to inflation, will also be dependent on how strong the NZD exchange rate is," interest rate strategist Martin Whetton with Nomura told The Sydney Morning Herald. "This mix does put the RBNZ in a bind. Inflation is being driven by the domestic, non tradeable sector and the RBNZ needs to contain it, given low spare capacity. The strong NZD is hurting exports, but it is containing inflation via tradeables."
The central bank also noted the nation's economy expanded 3.5 percent during the year leading to this past March, The Sydney Morning Herald reports.
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