In his latest report, the New Zealand’s Treasury Department predicted the economy will narrowly avoid a recession next yeargiven the increase in rates and the slowdown in demand.
Key Comments (via Bloomberg)
“The Treasury projects that inflation will slow from the current 6.9% to 5.2% in June 2023. He doesn’t see it going back to the RBNZ 1-3% target range until early 2025.”
“As usual, the Treasury included an alternative scenario in the budget.”
“The downside scenario – which assumes more persistent inflation and a steeper rise in interest rates – is a gloomy reading, as it projects five consecutive quarters of GDP declines starting in early 2023, as well as an increase of unemployment”.
RBNZ policy makers are due to meet next week and a further half-point hike in the policy rate is expected.
Source: Fx Street