Inflation is expected to return to the central bank’s 1% to 3% target in the third quarter of this year, IMF said. — Bloomberg
WELLINGTON: New Zealand will have scope to start cutting interest rates later this year as inflation returns to its target band, the International Monetary Fund (IMF) says in a staff report that contrasts with the central bank’s view.
Staff expect a gradual easing of monetary policy starting toward the end of 2024, the IMF said in the concluding statement of its Article IV review of New Zealand’s economy released yesterday.
Inflation is expected to return to the central bank’s 1% to 3% target in the third quarter of this year, it said.
“Global disinflation will help lower inflation in the tradables sector and migration will ease labour market tightness,” it said.
The IMF’s view contrasts with that of the Reserve Bank of New Zealand, which signalled last month that the official cash rate could stay at 5.5% well into 2025 despite inflation slowing. — Bloomberg
