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New Zealand’s central bank raised its benchmark interest rate by a half-point Wednesday to 4.75% as it continues trying to wrestle down inflation.
The increase, which can raise the borrowing costs for consumers on everything from credit cards to mortgages, comes despite the economic pain that a devastating cyclone is already inflicting on many people. The bank said that over time, the cyclone rebuild will only add to inflationary pressures.
Cyclone Gabrielle hit New Zealand last week, killing 11 people and causing billions of dollars in damage to homes and infrastructure.
Reserve Bank Governor Adrian Orr said the committee that makes interest rate decisions agreed the rate needed to increase to ensure that inflation returned to the bank’s target of around 2% from its current level of 7.
