New Zealand’s jobless rate held just above historic lows while wage inflation hit a 14-year high, raising the prospect that the central bank might have to increase rates more aggressively than economists expect.
The unemployment rate rose to 3.3% in the June quarter, Statistics New Zealand data showed on Wednesday, slightly higher than a forecast 3.1% by economists but just above the historic low of 3.2% in the previous quarter.
Most economists expect the Reserve Bank of New Zealand to raise rates by 50 basis points later this month and hotter than expected wage inflation to feed into expectations of more rate hikes than initially expected. "The risk of a wage price spiral is certainly not abating. That should keep the RBNZ on track to hike the OCR to 4% by the end of the year as per our forecasts," it added.
The bank has also signalled plans to increase the rate to 4.0% by the middle of 2023. However, economists are mixed on whether the RBNZ will need to go that far.
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