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Market Analysis

OECD Advises RBNZ to Maintain Restrictive Policy Until Inflation Aligns with Target
Amos Simanungkalit · 6.6K Views

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The OECD has advised that New Zealand should maintain a restrictive monetary policy until inflation aligns with the central bank's target range and recommended that the government rein in spending. 


According to the report, the Reserve Bank of New Zealand has kept its cash rate steady at 5.5% to alleviate capacity pressure and control inflation. However, despite previous rate hikes, inflation remains a concern due to higher domestic demand caused by increased migration.

 

The OECD predicts slow growth for New Zealand in 2024, with potential risks from global factors. It highlights the impact of the pandemic and government overspending on the country's fiscal position, urging a reduction in government expenditure.

 

New Zealand's Finance Minister, Nicola Willis, acknowledges the report's call to address government spending and emphasizes the need to rebuild the economy after a period of high inflation and interest rates. The country is currently experiencing a technical recession, which the National party attributes to the previous government's policies.

 


Willis states that New Zealand is already implementing some of the OECD's recommendations and pledges to consider others.

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.

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