Kiwibank Predicts Interest Rate Cuts

Despite ongoing challenges from the RBNZ's tight monetary policy, Kiwibank's chief economist Jarrod Kerr anticipates interest rate cuts as soon as November, contingent on inflation trends. Kerr forecasts that inflation will return to the RBNZ’s 1-3% target band by the September quarter, with data confirming this by mid-October. This could prompt rate cuts in November.

Last week’s GDP figures showed modest growth of 0.2% in the March quarter but a 2.4% decrease in per capita GDP from a year ago, indicating the strain on the economy. The restrictive policy has lowered inflation but also stifled growth. Westpac's Michael Gordon notes that while interest rates are curbing the economy, consumer imports of low-value goods have surged, highlighting ongoing spending beyond means and the negative impact on New Zealand's retail sector.

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