"Further rate hikes unlikely"
According to Rabobank, inflation expectations in the New Zealand economy are headed in the right direction, with interest rate relief on the cards for the second half of 2024.
Reserve Bank Governor Graeme Wheeler says the OCR is expected to remain unchanged until the end of the year.
"The global outlook remains mixed, with the euro area still in recession and signs of slower growth in China and Australia, but more positive recent indicators in the United States and Japan. Global debt markets have become more cautious due to uncertainty around the Federal Reserve's anticipated exit from quantitative easing," he says.
Growth in the New Zealand economy is picking up and, although uneven, is becoming more widespread across sectors, he says.
"Consumption is increasing and reconstruction in Canterbury will be reinforced by a broader national recovery in construction activity, particularly in Auckland. This will support aggregate activity and eventually help to ease the housing shortage."
Wheeler acknowledges the high dollar remains a problem.
"Despite having fallen on a trade-weighted basis since May 2013, the New Zealand dollar remains high and continues to be a headwind for the tradables sector, restricting export earnings and encouraging demand for imports."
