Key quotes
“The central bank should stop raising interest rates at 2.5% and not exceed 3%, forecast according to the most recent guidance. This is because it has to balance a weaker economy with energy-driven inflation.
“It’s possible that a correction on the housing market and higher inflation due to higher energy prices could cool down the NZ economy quicker than expected. Higher interest rates might not be appropriate.”
“I think they should keep delivering on the promises they made and make 25 basis points every time.”
“By the end the year, we will be in a position where the housing market is correcting. It is also going to be interesting to watch how discretionary spending holds up as fuel prices rise. The RBNZ should stop at 3%. If things get worse, they could stop at 2.5%.
Reaction of the market
NZD/USD fell 0.12% to 0.6855 at the last check. This was due to Russia-Ukraine turmoil and risk-aversion. These comments are taken with a grain of salt by kiwi traders.
