Kiwibank has joined the chorus of voices urging the Reserve Bank of New Zealand to maintain the Official Cash Rate at its current level, citing persistent weakness in economic demand and a deteriorating labor market outlook.
The state-owned bank’s chief economist, Jarrod Kerr, argued that the central bank should resist pressure to cut rates, pointing to a forecast that unemployment will rise to 5.6% by June next year.
"It's not Covid," Kerr said, dismissing comparisons to pandemic-era supply disruptions and instead highlighting the structural nature of the current slowdown.
Kerr emphasized that the current economic headwinds are driven by domestic demand deficiencies rather than external supply shocks, distinguishing the New Zealand situation from global energy-driven inflationary pressures.
"It's not Covid," Kerr said, dismissing comparisons to pandemic-era supply disruptions and instead highlighting the structural nature of the current slowdown.
Kiwibank economists have been outliers this year, maintaining a steadfast position that the OCR should remain unchanged despite broader market expectations for monetary easing.
The bank’s stance comes as global central banks navigate a complex policy landscape.