The Reserve Bank of New Zealand slowed the pace of its policy tightening as governor Adrian Orr warned that the devastation caused by severe weather will worsen inflationary pressures and hit economic growth, complicating its fight against surging consumer prices.

New Zealand’s central bank lifted the cash rate by 0.5 percentage points to 4.75 per cent on Wednesday, in line with economist expectations. The RBNZ even considered a second consecutive 0.75 percentage point increase. The New Zealand dollar firmed to US62.26¢ after the decision.