When the Facts Change Dissension in the RBNZ ranks
May 29, 2025
Mary Jo Vergara, an economist from Kiwibank, dives into the Reserve Bank of New Zealand's recent official cash rate cut and the surprising dissent within the committee. She discusses the uncertain economic landscape influenced by global factors like tariffs and inflation, and the implications for New Zealand's recovery. The conversation touches on how interest rate changes affect mortgage rates, living costs, and the housing market. Should we brace for a storm in the economy or see a silver lining? Tune in to find out!
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Reserve Bank's Rate Cut Debate
- The Reserve Bank cut the OCR by 0.25% but debated holding it due to uncertainty.
- Scenarios consider tariffs as inflationary or deflationary, reflecting global economic ambiguity.
Dissent in Rate Setting Committee
- One committee member voted to hold the OCR, signaling internal Reserve Bank disagreement.
- Most believe more easing is needed due to risks to growth and inflation outlook.
Tariffs' Complex Inflation Impact
- Tariff shocks could either increase US inflation or depress global demand lowering inflation.
- Reserve Bank scenarios present both inflationary and deflationary risks, leaning to a mild deflationary view for NZ.