New Zealand Dollar Rises with Interest Rates

The New Zealand dollar rose today after the central bank increased the interest rates, hinting that it’s more concerned with the inflation that with the appreciation of the nation currency.

The Reserve Bank of New Zealand raised the official cash rate to 2.75 percent from the record-low 2.5 percent. The economists expect further increases of the interest rates as inflation predicted to jump to 5.3 percent in 2011 after the sales tax rose, increasing the prices. Alan Bollard, the governor of the RBNZ, said:

Underlying inflationary pressures are expected to increase. Given the current low level of the cash rate, it is therefore appropriate to gradually remove policy stimulus.

NZD/USD rose to about 0.6806 as of 10:34 GMT today after it opened at 0.6663

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