SYDNEY, Nov 28 Reuters New Zealand is likely facing a shallow recession as interest rates need to rise further to tame inflation, a top central banker said on Monday, suggesting that a pause in the policy tightening streak was still a distant prospect.

In an interview, Reserve Bank of New Zealand RBNZ Assistant Governor Karen Silk said the central bank would be closely monitoring high frequency data including on spending, business investment and housing when deciding on how much to hike rates when it next meets in February.

Inflation data for the fourth quarter, due on Jan. 25, will also be a key consideration.

For us to start reversing where we are at in terms of the decisions or even dramatically slowing the pace of change, we need to see inflation data turn and we also need to see inflation expectations come down, said Silk.

Last week, the central bank raised its official cash rate by a record 75 basis points to a near 14year peak of 4.25 as it struggles to contain inflation currently running near threedecade highs.

Markets are leaning toward another hike of 75 basis points in February, and have fully priced in a peak of 5.5 by July next year.

The RBNZ has forecast that all of this tightening combined with a slowdown in global growth will trigger a yearlong recession at home starting in mid2023.

Silk said the projected 1 decline in gross domestic product over four quarters would be a relatively shallow and technical recession, partly reflecting a weaker global…