The Reserve Bank of New Zealand has left its cash rate on hold at 5.50% but again hinted that a rate cut could be coming.
It left a hint of a suggestion for some interest rate relief after its last meeting six weeks ago, and in the post-meeting statement on Wednesday, the hint became more of a nudge and a wink.
New Zealand’s CPI is 4%, down from more than 5% nine months ago, and the RBNZ clearly expects the softening trend to continue for the rest of 2024.
Australia’s consumer price inflation was 4% in the year to May, according to the monthly indicator, and a little less according to the March quarter CPI.
The post-meeting statement wasn’t as hardline as they have been after recent meetings. It read:
"Restrictive monetary policy has significantly reduced consumer price inflation, with the Committee expecting headline inflation to return to within the 1 to 3 percent target range in the second half of this year.
The decline in inflation reflects receding domestic pricing pressures, as well as lower inflation for goods and services imported into New Zealand. Labour market pressures have eased, reflecting cautious hiring decisions by firms and an increased supply of labour.
The level of economic activity, including business and consumer investment spending and investment intentions, is consistent with the restrictive monetary stance.
Current and expected government spending will restrain overall spending in the economy. However, the positive impact of the pending tax cuts on private spending is less certain.
Some domestically generated price pressures remain strong. But there are signs inflation persistence will ease in line with the fall in capacity pressures and business pricing intentions.
The Committee agreed that monetary policy will need to remain restrictive. The extent of this restraint will be tempered over time, consistent with the expected decline in inflation pressures."
