OECD says the Reserve Bank of New Zealand has limited space for rate cuts this year

The Organisation for Economic Co-operation and Development’s (OECD) has published its annual survey of the New Zealand economy.

OECD says:

• RBNZ needs to ensure inflation falls to 2% before it cuts rates
• combined with further fiscal consolidation to help curb inflation and restore fiscal headroom
• forecast economic growth of less than 1% for 2024, rising to just under 2 % in 2025
• economic growth has stalled
• said “rebalancing” was under way to counter high inflation and large budget deficits caused by increased spending during the pandemic
• “Monetary policy will need to remain restrictive coupled with further fiscal consolidation to help curb inflation and restore fiscal space,” “The government should set operating allowances and tax policies that will gradually reduce the fiscal deficit to reach budget balance.”
  any tax cuts needed to be fully funded either by spending cuts or an increase in revenue
• tax reforms should consider a capital gains tax

There was plenty more the OECD recommends, they do talk a lot.

OECD membership comprises 38 of the world’s most-developed nations

This article was written by Eamonn Sheridan at www.forexlive.com.