In a widely expected move, the Reserve Bank of New Zealand’s base rate rose 0.25 percentage points to 1%, following similar rises in October and November.

The latest hike reverses a 0.75% cut introduced to stave off a virus-induced recession as the pandemic swept the globe in March 2020.

The bank’s main priority has now switched to curbing inflation and it signalled further hikes to come as annual price rises approach 6%, levels not seen since 1990.

“It remains appropriate to continue reducing monetary stimulus so as to maintain price stability and support maximum sustainable employment,” it said.

“The level of global economic activity is generating rising inflation pressures, exacerbated by ongoing supply disruptions.”

It said oil prices and transport costs were fuelling inflation but it should settle into the bank’s 1-3% target range “over coming years”.