Tightening cycles nearing their end

Both the RBA and the RBNZ have more work to do to rein in the recent surge in inflation. That aggressive monetary tightening is starting to take its toll on economic activity and we expect GDP growth to slow more sharply than most anticipate. With New Zealand set to enter a recession, we expect the RBNZ to loosen policy by the end of this year. By contrast, stubbornly high services inflation will prompt the RBA to wait until mid-2024 before cutting interest rates again.