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SYDNEY (MNI)

The Reserve Bank of New Zealandsaid that rising inflation pressures and ongoing supply disruptions require reduced monetary stimulus, and has hiked its Official Cash Rate by 25bps to 1.0% on Wednesday.

The hike is the third 25bps rise since October, with the bank citing the need for price stability and sustainable full employment, see: MNI STATE OF PLAY: RBNZ To Continue Rate Hikes, Cld Outline QT.

The RBNZ also agreed to start a gradual reduction of bond holdings under the Large Scale Asset Purchase (LSAP) programme - through both bond maturities and managed sales. The RBNZ said capacity pressures were tightening and employment was now above its maximum sustainable level. Inflation, at 5.9%, is running well above the banks 1% to 3% target range but is expected to return to the 2% midpoint in coming years as supply issues improve.

More on the RBNZ outlook will be revealed later on Wednesday when Governor Adrian Orr holds his regular press conference.

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