New Zealand financial markets took news of a 5.9 per cent increase in inflation in 2021 largely in their stride, with most of the reaction taking place in the bond markets in response to the US Federal Reserve's latest monetary policy update.
The Fed signalled its intention to raise interest rates in March, which would be the first increase since 2018.
"With inflation well above 2 per cent and a strong labour market, the committee expects it will soon be appropriate to raise the target range for the Federal funds rate," the Fed policymakers said in a statement at the end of a two-day meeting.
New Zealand 10-year bonds took their lead from US Treasuries and traded up at 2.7 per cent - their highest point since November 2018 - before retreating a little after the CPI.