Weekly Economic Commentary

The report highlights that easing Middle East tensions and lower oil prices have reduced short-term inflation risks in New Zealand. Consequently, Westpac expects the RBNZ to hold the Official Cash Rate until September despite economic headwinds.

Key Takeaways

• 1.The easing of tensions in the Middle East has reduced global fuel prices and inflationary pressure, providing the RBNZ with more 'headroom' to delay interest rate hikes.
• 2.Economic momentum in New Zealand has slowed due to high living costs and negative impact from the Middle East conflict on households and business confidence.
• 3.Westpac continues to forecast the RBNZ will keep the Official Cash Rate on hold until September, despite market expectations of a potential July hike.

Table of Contents

• July RBNZ pause more likely following ceasefire
• After a firm start to the year, economic momentum has faded.
• Inflation pressures moderating.
• The changing global backdrop gives the RBNZ more headroom.
• Global wrap
• Financial markets wrap
• The week ahead
• Economic and financial forecasts
• Data calendar

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