ONLY CHARTS
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1. The number of company liquidations in New Zealand is picking up quite sharply. As in Australia, some of this increase reflects delays to bankruptcy during the pandemic.
2. Lessons from Canada: inflation can tank but at the cost of a sharper rise in unemployment. So far, Australia is broadly following the US path.
3. The RBNZ lifted its CPI inflation forecasts in today’s Monetary Policy Statement…
4. …and modestly increased its unemployment rate forecasts from 2026
5. The RBNZ lifted its forecast OCR track by 25-30 bps past the near-term, consistent with the MPC’s view that “[m]onetary policy may need to tighten and/or remain restrictive for longer“ than envisaged 3 months ago.
A wrinkle here, however, is that the RBNZ’s estimate of the long-run ‘neutral’ OCR was also lifted 25bps to 2.75%.
6. Overall, a bit more hawkish from the RBNZ than we envisaged, and AUDNZD has reacted as such (down). Let’s see if Orr walks it back at the press conference.
7. Comparing the RBNZ and RBA, it remains clear that the RBNZ is determined to err more on the side of allowing the unemployment rate to rise above estimates of ‘full employment’ in its pursuit of returning inflation to target in a timely fashion.
