NZ: Risks to the economic outlook have increased - ANZ

Analysts at ANZ note that the risks to the New Zealand’s economic outlook have increased, both domestically and from offshore.

Key Quotes

“Data from business surveys highlight the risk of a growth wobble, but this hasn’t been reflected in hard data – at least not yet. We do not expect that the cycle is about to roll over, but think that acceleration from here will be challenging to achieve.”

“We continue to see GDP growing at around 2½-3% y/y. Based on this expectation, we suspect it will be difficult to maintain inflation near the midpoint of the RBNZ’s target band. CPI inflation was stronger than expected in Q3, but broad-based inflation pressures are lacking.”

“The RBNZ have made it clear that OCR hikes are off the table until they see core inflation above the target midpoint. Given this, we expect that a cautious tone will be maintained by the RBNZ, with the OCR on hold for the foreseeable future.”