New Zealand unemployment rose to the highest in two years in the third quarter while wage inflation slowed, indicating the central bank’s interest rate increases are weakening the labor market.

The jobless rate climbed to 3.9% from 3.6% in the second quarter, Statistics New Zealand said Wednesday in Wellington. That matched economists’ expectations. Employment fell 0.2% from the previous three months, missing estimates of a small gain, while annual wage inflation eased to 4.1%.

A record influx of immigrants is helping to alleviate a labor shortage and reduce upward pressure on wages, while higher borrowing costs are damping demand. The Reserve Bank has signaled it has raised rates sufficiently to tame inflation, but some economists think it will be forced to resume tightening to get price pressures under control.

The New Zealand dollar eased after the data to buy 58.04 US cents at 10:56 a.m. in Wellington, down from 58.24 cents beforehand.