The New Zealand economy continues to pick up the pace. While Canterbury’s reconstruction remains a backbone, the upswing is radiating more and more into the various other regions and industries. But with GDP growth moving above potential, excess demand is emerging and with it inflationary pressure and risk. In view of this, the Reserve Bank has begun to lift its Official Cash Rate from extreme lows with the aim of essentially normalising interest rates by 2015/16. The Bank would be further along this process was it not for the disinflationary forces of the stubbornly high NZD.
Read the full report: Economic Research