WELLINGTON, New Zealand (AP) -- In another sign the world economy is finally picking up steam after five years of recession and anemic growth, New Zealand has become the first developed nation to embark on a program of interest rate hikes.
New Zealand's Reserve Bank on Thursday raised its benchmark interest rate by quarter of a percent to 2.75 percent after holding it at record lows for three years. The bank indicated it plans to continue raising rates to about 5 percent by March 2017.
The South Pacific nation of 4.5 million has benefited from booming demand in China for its milk products and a rebuilding effort in the city of Christchurch following a devastating earthquake there three years ago.
Growth has been running at about 3.5 percent and housing prices have increased rapidly.