January 31, 2014 / 12:15 AM / in 4 years

New Zealand rates need to rise soon to counter inflation-RBNZ governor

CHRISTCHURCH, New Zealand, Jan 31 (Reuters) - New Zealand interest rates will need to rise soon to counter increasing inflationary pressures, the central bank head said on Friday.

Reserve Bank of New Zealand Governor Graeme Wheeler said the economy was growing faster than expected and inflation pressures from a strong housing and building market would also pick up over the next two years.

“In such an environment, there is a need to return interest rates to more-normal levels and the Bank expects to begin this adjustment soon,” he said in speech notes to a business group in Christchurch.

The statement echoed comments on Thursday, when the RBNZ held its benchmark cash rate steady at a record low 2.5 percent but gave a clear hint that an increase is likely in March to combat stronger inflation pressures.

Reporting by Gyles Beckford in Wellington and Naomi Tajitsu in Christchurch; Editing by Paul Tait

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