The MPC indicates that future changes to the OCR would depend on its evolving assessment of the economy. In this regard, the September quarter Consumer Price Index and labour market statistics will be critical in informing its near-term OCR decisions.

Gross Domestic Product (GDP) declined 0. 2% in the June quarter, which was a smaller fall than most economists had penciled in.

In cutting the Official Cash Rate (OCR) by 0.25% to 5.25% the Reserve Bank of New Zealand (RBNZ) Monetary Policy Committee (MPC) has executed a 180 degree turn from its hawkish stance just three months ago

The deciding factor for the MPC’s OCR cut was its view that excess capacity is growing by more than expected, which is seen as pushing inflation down further than it previously thought.

Disinflation progress continued to be made in the June quarter, with the annual inflation rate just a touch above the Reserve Bank’s 1-3% target.

Despite non-tradeable inflation remaining sticky, the Reserve Bank is likely to see justification in the June quarter outcome for its recent pivot to a less aggressive stance. 

The Reserve Bank of New Zealand Monetary Policy Committee kept the Official Cash Rate at 5.5% as expected by most economists.

A dovish statement from the Monetary Policy Committee opens the way for an Official Cash Rate cut as early as October.

Economic activity bounced modestly in the March quarter 2024 after a weak end to 2023.

Consumers appear to be in slightly better shape than many thought, although measurement difficulties suggest there should be caution in coming to firm conclusions at this stage.

There were no major surprises in the Budget, with tax relief the centrepiece. Health, education, law and order and transport also were allocated significant extra funding.

While the Budget initiatives were largely fiscally neutral, a weaker economic outlook means the return to budget surplus is further delayed until 2027/28.

Given the tight room for future Budget initiatives and downside risks to the New Zealand economy, the years ahead will be challenging for the Government.

The Reserve Bank Monetary Policy Committee kept the Official Cash Rate (OCR) at 5.5% as most expected.

The Committee ignored clear signs of weakening in the New Zealand economy and labour market and maintained a stringent OCR outlook, with cuts not occurring until at least the September quarter 2025.

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