New Zealand inflation rate surpasses target range, raising possibility of central bank interest rate hike.

With the ongoing economic recovery pushing up prices, New Zealand's inflation rate in the fourth quarter surpassed the central bank's target range of 1%-3%, increasing the risk of interest rate hikes later this year. Data released by Statistics New Zealand in Wellington on Friday showed that the consumer price index rose by 3.1% year-on-year in the fourth quarter, higher than the 3% in the third quarter. Economists had expected an increase of 3%. The fourth quarter CPI rose by 0.6% on a quarterly basis, slightly higher than the expected 0.5% increase. Despite the central bank's forecast of inflation slowing to around 2% this year, today's strong inflation data confirms that its loose policy is almost certainly at an end, and further indicates that interest rates may need to rise by the end of 2026. Investors widely believe that a rate hike in September is highly likely, although most economists expect the benchmark rate to remain unchanged until 2027.