New Zealand central bank says financial system remains strong despite rising interest rates

New Zealand central bank says financial system remains strong despite rising interest rates
New Zealand central bank says financial system remains strong despite rising interest rates

New Zealand’s central bank said Wednesday that the country’s financial system remains strong as it continues to adapt to the higher interest rate environment.

“New Zealand’s financial system remains well placed to weather a range of severe scenarios,” the Reserve Bank of New Zealand (RBNZ) said in a statement released with its Financial Stability Report, which is published twice a year. year.

She added that while global inflation is falling, there remains a risk that new or persistent inflationary pressures will mean global interest rates remain restrictive for longer, putting continued pressure on households, businesses and the financial system.

New Zealand’s official bank rate is at its highest level in 15 years and inflation is currently at 4.0%, putting pressure on households and businesses across the country.

This month, the RBNZ kept its bank rate unchanged at 5.5% for the sixth consecutive meeting and reaffirmed that tight monetary policy was needed to further reduce capacity pressure and bring down inflation. .

The Financial Stability Report says that while market prices currently imply that advanced economies will begin cutting interest rates later in the year, central bank communications have emphasized the uncertainty of the outlook .

The report says most New Zealand mortgage borrowers have now reassessed their interest rates upwards and some are taking tough action by cutting spending and extending their repayment terms. Some households face increased job uncertainty. (Reporting by Lucy Craymer; Writing by Chris Reese and Jamie Freed)

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