The Reserve Bank of New Zealand (RBNZ) has already lifted the official cash rate to 4.75%, which is among the most aggressive tightening in the developed world. ANZ’s economics team believes the RBNZ will hike the cash rate another 0.5% to a peak of 5.25%, and then keep it at this level through 2024. “The interplay between services and wage inflation means that for this component of inflation to ease, we need to see demand and supply in the labour market become better aligned”. Accordingly, ANZ believes “the evolution of labour market pressures over 2023 will be key for understanding the likely path of interest rates over the next few years”. This points to inflation remaining higher for longer.

Source: Stuff March 10, 2023 21:49 UTC