The New Zealand Institute of Economic Research maintained its forecast for two additional 25bps cuts by the RBNZ at the October and November meetings, despite a mild uptick in inflation pressures during Q3.
In its latest Quarterly Survey of Business Opinion (QSBO), NZIER said a net 11% of firms raised prices, compared with 1% reporting price cuts in the previous quarter, suggesting that cost pressures are firming again. NZIER expects annual CPI inflation to rise slightly above 3% in the near term but sees it drifting back toward the 2% midpoint of the RBNZ’s target range as excess capacity continues to weigh on domestic demand.
Business sentiment, however, softened, with 15% of firms expecting economic improvement, down from 26% in Q2, while 14% reported weaker trading activity in their own businesses. The survey also pointed to declining hiring and investment intentions, as 23% of firms cut staff and a majority plan to reduce capital spending over the coming year.
The mixed picture—firmer inflation but softer demand—supports NZIER’s view that the RBNZ will deliver further easing to stabilize growth, even as it remains alert to temporary inflation volatility.
