A note from KiwiBank in NZ on the Reserve Bank of New Zealand.

In brief:

  • The RBNZ delivered a 25bp hike and left the peak in the OCR at 5.50%. The May meeting signalled the peak in the tightening cycle. The next move is a rate cut, but not for a while yet.
  • The RBNZ looks to be on hold for the remainder of 2023. Now’s the time to wait and see how previous hikes wash through the economy. A slowdown in activity is still forecast. The economy requires rebalancing to bring inflation back to target.
  • Our chart of the week looks at the back-to-back contraction in retail sales volumes. The sector faces challenging times ahead. Households’ appetite and ability to spend is weakening in the face of high inflation and rising interest rates. Monetary policy is beginning to bite.

The chart KiwiBank provide and refer to:

nz rbnz retail sales 29 May 2023