The Reserve Bank of New Zealand has sharply increased borrowing costs from October 2021. New Zealand was one of the first countries to raise interest rates in the wake of the Covid crisis. The country’s central bank outpaced the US Federal Reserve in rate hikes. Last month, the bank had raised the key interest rate to 5.5 percent.
New Zealanders, who had already faced inflation, are now experiencing a severe financial crisis as loan repayments and other borrowing rates soar. Startups are laying off many people as they try to save money. Another crisis facing the country is unemployment.
Borrowing costs have also increased as central banks around the world try to stem inflation following the Covid-19 lockdown. Inflation in New Zealand has also been fueled by rising prices of everything from fuel to food due to the war in Ukraine.
In the first three months of this year, New Zealand’s economy was severely affected by cyclones Hale and Gabriel and teacher strikes. The weather changes caused by the cyclone caused disruption of services in horticulture, transport sector, education sector etc. All this deepened the economic crisis.
