New Zealand has stunned investors by raising interest rates a third time this year to 8pc to head off an inflationary spiral, adding to fears that central banks across the world may need to tighten much more than originally thought.
The rise was denounced as a "kick in the teeth" by the Auckland Chamber of Commerce, a sign that consensus over monetary policy is starting to break down as the overheating crisis turns serious.
Alan Bollard, the reserve bank governor, said roaring demand for commodities called for draconian measures. "We may once again be surprised about the persistence of domestic inflation," he said.
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Friday, 8 June 2007
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