The decision by the Reserve Bank of New Zealand to leave rates on hold at 5.50% came as a surprise to no one. Indeed, the Committee noted that monetary policy in New Zealand had turned restrictive far sooner than in many other economies. Although the Bank implied that rate cuts would be unlikely before the second half of 2024, we think the combination of a deepening recession and easing price pressures will pave the way for an easing cycle as early as Q1 2024.
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