WELLINGTON (Reuters – New Zealand’s central banks raised interest rates on Wednesday, the first increase in seven years. They also indicated further tightening would be coming as they seek to cool their domestic economy and cool the housing market.

This rate increase of 25 basis points marks the beginning of a tightening process that was expected to start in August but was delayed by an epidemic of coronavirus Delta.

All 20 economists polled at Reuters had predicted the Reserve Bank of New Zealand’s (RBNZ), 0.50% increase in cash rate.

As markets fully anticipated a 25-basis point increase, the New Zealand dollar fell slightly to $0.6949.

In announcing their decision, the RBNZ stated that “the Committee observed that further removal of monetary policy stimuli is expected over the time with future moves contingent upon the medium-term outlookfor inflation and employment.”

New Zealand’s rate rise puts it ahead of other nations with developed economies. Central banks are trying to lower emergency-level borrowing costs. But, countries like South Korea and Norway already have increased rates.

For the eleventh consecutive month, Australia’s central bank maintained interest rates at record lows of 0.1%.

The Reuters poll revealed that New Zealand economists expect the benchmark rate of 1.50% to be reached by next year’s end and 1.75% by 2023.

This nation in the South Pacific has experienced a fast economic recovery after a severe recession last year. It did this partly by eliminating coronaviruses and opening its economy earlier than others.