The New Zealand economy is clearly overheating. Measures of underlying inflation are mostly above the ceiling of the RBNZ’s target band. And employment is now above the Bank’s estimate of the maximum sustainable level. We therefore expect the RBNZ to ramp up its hiking cycle with a 50bp hike at its meeting on 24th November. And we now expect the Bank to hike rates all the way to 2.0% by the middle of next year.
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