Tag: NZ

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New Zealand central bank cuts rates by 0.50%

New Zealand Central Bank

New Zealand’s central bank has reduced its benchmark interest rate by 0.50% points following its monetary policy meeting, resulting in a consecutive interest rate reduction

This decrease sets the Reserve Bank of New Zealand’s interest rate at 4.75%, down from 5.25%. Economists surveyed by Reuters had anticipated this move.

Previously in August, the RBNZ made an ‘unexpected’ interest rate cut of 25 basis points. The central bank indicated that the extent of future reductions would hinge on its confidence in maintaining a low inflation environment.

In a statement, the central bank stated that it ‘assesses that annual consumer price inflation is within its 1% to 3% inflation target range and converging on the 2 percent midpoint.“

New Zealand’s annual inflation rate reached 7.3% in the June quarter 2022, its highest level in over some 30 years. NZ inflation has since dropped to 3.3% as of June 2024, but still remains above the central banks medium term target range of between 1% and 3%.

Analysts are expecting a further cut in November 2024.

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People leave New Zealand in record numbers seeking better opportunities

Leaving New Zealand

Record numbers of people are leaving New Zealand as unemployment increases, interest rates stay elevated, and economic growth remains weak, according to government statistics.

Statistics New Zealand’s data released on Tuesday 13th August 2024 indicates that 131,200 individuals left New Zealand in the year ending June 2024, tentatively the highest annual figure on record. Approximately one-third of these individuals were bound for Australia.

Although net migration is still high, economists anticipate a decline as fewer foreign nationals show interest in moving to New Zealand due to the weaker economy.

The statistics reveal that 80,174 of those who left were citizens, nearly twice the number that left before the Covid-19 pandemic.

During the pandemic, New Zealanders abroad returned in large numbers, spurred by the government’s response to the crisis.

However, for some, the appeal of the 5.3 million-strong country has waned. Economists note that New Zealanders, vexed by living costs, high interest rates, and limited job prospects, are considering relocation to Australia, the UK, and other countries.

New Zealand’s economy is floundering following the central bank’s 521 basis point increase in cash rates, the most substantial hike since the official cash rate’s inception in 1999.

The economy grew by only 0.2% in the first quarter, unemployment climbed to 4.7% in the second quarter, and inflation continues to be high at 3.3%.