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New Zealand raises benchmark interest rates by 0.25 per cent to 2.75 per cent

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FILE- In this Tuesday, Jan. 28, 2014 file photo, workers queue to get take-out lunches at the Chef\'s Palette eatery in Wellington, New Zealand. New Zealand’s Reserve Bank raised its benchmark interest rate by quarter of a percentage point to 2.75 percent after holding it at a record low for three years. The bank indicated it plans to continue raising rates to about 5 percent by March 2017. (AP Photo/Nick Perry, File)

WELLINGTON, New Zealand – 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 per cent to 2.75 per cent after holding it at record lows for three years. The bank indicated it plans to continue raising rates to about 5 per cent 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 per cent and housing prices have increased rapidly.

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