On May 24, the Federal Reserve Bank of New Zealand further raised the official cash rate by 25 basis points today, warning that inflation is still too high and that interest rate settings will remain restrictive for a period of time.
The decision to tighten monetary policy further comes as New Zealand rebuilds from the storm.
The rebuilding plan was at the heart of last week’s government’s annual budget, which included NZ$1.1 billion ($687 million) for recovery after the cyclone, which put the total cost of the disaster at an estimated NZ$14.5 billion.
Economists have warned that increased spending could stimulate the economy and fuel inflation. In addition, New Zealand has seen a surge in immigration and tourism after borders reopened, which could also support the country’s economy this year.