RBNZ hikes by 50 bps for 4th time in most aggressive tightening
RBNZ warns of bringing forward hikes in hawkish tone; lifts NZD, hits bonds
C.bank projects higher peak for rates to curb rising inflation
Before latest hike, some economists were divided on tightening pace

WELLINGTON, Aug 17 Reuters New Zealand39;s central bank on Wednesday delivered its seventh straight interest rate hike and signalled a more hawkish tightening path over coming months to rein in stubbornly high inflation.

The aggressive tone of the Reserve Bank of New Zealand39;s RBNZ statement warning of future hikes being brought forward caught some traders by surprise, lifting the local dollar and sending swap rates higher.

The RBNZ raised the official cash rate OCR by 50 basis points to 3.0 as expected, a level not seen since September 2015, and crucially, it now sees rates at 4.0 by early next year, compared to a previous projection of 3.7.

Wednesday fourth straight 50bps hike, along with earlier smaller increases that lifted the cash rate from a record low of 0.25 in October, marked the most aggressive tightening by the central bank since 1999.

The Committee agreed that domestic inflationary pressures had increased since May and to further bring forward the timing of OCR increases, the central bank said in a statement.

The RBNZ also increased the projected peak for the cash rate to 4.1 where it expects it to remain into 2024.

The statement was suitably hawkish, and highlighted the need…