The decision by the Reserve Bank of New Zealand to lift its official cash rate by 25bp, to 5.50%, was in line with what most had anticipated. However, with the Bank sounding more dovish than it has in the recent past, we think its hiking cycle is now over. Although the RBNZ reiterated its view that policy would need to be restrictive for the foreseeable future, we believe that an incipient recession will prompt the Bank to pivot to rate cuts before the year is out.
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