Wednesday, February 8

New Zealand central bank hikes rates

SINGAPORE — Shares in Asia-Pacific nudged higher in Wednesday trade, with New Zealand’s central bank announcing yet another rate hike.

Hong Kong’s Hang Seng index advanced 0.64% by the afternoon, while the Shanghai Composite in mainland China edged about 0.6% higher and the Shenzhen Component gained 0.145%.

The Nikkei 225 in Japan climbed 0.11% while the Topix index stood 0.24% higher.

The RBNZ, like a lot of other central banks, is a long way behind the curve.

Jeremy Lawson

Chief economist, abrdn

Elsewhere, South Korea’s Kospi gained 0.81%. The S&P/ASX 200 in Australia advanced 0.77%.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.79% higher.

RBNZ announces rate hike

The Reserve Bank of New Zealand announced Wednesday its decision to hike its official cash rate by 50 basis points to 2%, a decision expected by most of the economists polled by Reuters.

“A larger and earlier increase in the [official cash rate] reduces the risk of inflation becoming persistent, while also providing more policy flexibility ahead in light of the highly uncertain global economic environment,” the RBNZ said in a release announcing the rate hike.

The New Zealand dollar changed hands at $0.6503 following the rate hike announcement, bouncing after seeing an earlier low of $0.6418.

This latest rate hike would be the country’s fifth in a row.

“The RBNZ, like a lot of other central banks, is a long way behind the curve,” Jeremy Lawson, chief economist at abrdn, told CNBC’s “Street Signs Asia” on Wednesday.

“The narrative is that … these rate hikes are front loaded, the central bank is starting to get ahead of the game. Actually I don’t think that’s really true, cause really the policy adjustment needed to start last year in many economies and it didn’t and so now we’re in this sort of very sort of steep policy tightening phase,” Lawson said.

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