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.

Not-for-profits and charities play a vital role in New Zealand’s financial ecosystem. The charitable sector helps to address various social, environmental, and community needs by supporting people and causes that can completely change the course of people’s lives for the better.

The labour market showed a clear cooling trend in the March quarter. We expect further labour market softness ahead.

The Reserve Bank of New Zealand (RBNZ) Monetary Policy Committee (MPC) is unlikely at this stage to be overly swayed to an easier stance by the labour market trend.

The New Zealand labour market modestly cooled in the December quarter but was stronger than the Reserve Bank and most economists expected.

The Reserve Bank is not likely to be comfortable with slow easing in labour market pressures. It will, therefore, likely maintain its vigilant monetary policy stance at its 28 February meeting.

Double-Dipping Summary With a mild contraction in the September and December quarters, the New Zealand economy entered a double-dip recession.

The Reserve Bank of New Zealand Monetary Policy Committee decided to hold the line, keeping the Official Cash Rate at 5.5% and maintaining an Official Cash Rate outlook similar to its November forecasts.

It appears the RBNZ now has a more balanced view on inflation pressures than its ultra-vigilant November statement and subsequent communications had led us to believe.