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Reserve Bank of New Zealand - Source: ONE News -
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The Reserve Bank of Australia's decision to raise its interest rates could signal that the time is near for New Zealand's Reserve Bank to follow suit, a bank researcher says.
The RBA on Tuesday raised interest rates by 0.25% to 3.25% saying it was prudent to start loosening the monetary policy stimulus as conditions improved in the local economy.
Australia, which has largely skirted the recession, is the first country in the world to raise its interest rates since March 2008.
"The demand for commodities has pulled the economy through yet again with Australia, so things are improving. Of course, on top of that there was this (government) stimulus and the collective effect of that is that things are growing and growing well in Australia," says MacQuarie Private Wealth analyst Ian Witters.
Witters says there is talk that the RBA's rates could rise to as much as 5.2% by the same time next year.
BNZ head of research Stephen Toplis says Tuesday's move by the RBA could prompt the Reserve Bank of New Zealand to raise rates.
The RBNZ reiterated in its latest monetary policy statement that it would keep interest rates low until the latter part of next year.
Unlike Australia, New Zealand suffered five quarters of recession and it only showing weak re-emergence.
However, Toplis believes that waiting until late next year to
raise rates may be too late.
