In its latest Quarterly Predictions, NZIER noted there are “signs of further easing in inflation pressures” in New Zealand. But the pivotal question for RBNZ is whether this easing is “occurring at a fast enough pace” to bring inflation back to target band of 1-3%.
“Based on the balance of risks, we expect “no further OCR increases in this cycle,” NZIER said.
Highlighting the New Zealand economy’s “resilience,” NZIER acknowledges the potential for inflation to persist above RBNZ’s target, suggesting a “cautious approach” from the central bank, gearing towards understanding the “lag effects of the monetary policy tightening” already implemented.
Meanwhile, NZIER forecasts RBNZ OCR cuts to start mid-2025, “once it is confident it has reined in inflation sufficiently to keep it around the 2 percent inflation target mid-point over the coming year.”
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