Latest news with #Eckhold
NZ Herald
11-08-2025
- Business
- NZ Herald
US tariff uncertainty clouds New Zealand's economic outlook
Eckhold said the decision to impose 15% tariffs on New Zealand's exports to the US is disappointing but manageable. 'While there are downside risks that still need to be monitored, these risks now seem less pronounced with the prospect of a full-blown trade war now unlikely. 'It remains the case that the country that will be hurt most by tariffs is the US itself.' Eckhold said annual Gross Domestic Product (GDP) growth should strengthen to 2.4% this year and around 3.1% in 2026, boosted by households' rising disposable income, a lift in export volumes and a gradual recovery in tourist arrivals. 'Uncertainty related to US tariffs and sluggishness in the labour market have likely weighed on the economy in the June quarter. In addition, statistical quirks associated with seasonal adjustment mean that we expect that measured GDP growth will likely be understated in the June quarter and overstated later in the year,' he said. Households with mortgages would continue to see the benefits of a falling OCR, Eckhold said. 'To date, mortgaged households have felt just half of the expected final impact of the RBNZ's policy easing. 'Around 50% of all mortgages will refinance over the next six months, further lowering the average mortgage rate paid by households. Together with growth in rural incomes and growing consumer confidence as the labour market stabilises, this should provide a boost to household spending.' Eckhold said he expected the unemployment rate to peak at 5.3% by the end of this year, before declining in 2026 and 2027. 'At present, demand for labour remains weak … as the economic recovery gathers steam and firms begin to lift hiring, we expect a downtrend in the unemployment rate to emerge in 2026.' Inflation was likely to approach the top of the Reserve Bank's (RBNZ) 1-3% target range over the second half of the year, reflecting rising food prices and large increases in administered prices (such as local council rates), Eckhold said. 'While inflation is likely to fall back towards the middle of the band early next year, the RBNZ needs to be mindful of the risk that a period of higher near-term inflation could feed into inflation expectations. 'This points to a cautious approach to easing monetary policy further'. Eckhold said Westpac expects the RBNZ will deliver a 25-basis-point cut to the OCR next week, having kept the cash rate on hold in July at 3.25%. 'If the economy evolves as expected, this is likely to be the low point for this cycle. 'A deeper easing cycle could still occur should the global economy underperform, or if consumers and businesses delay spending and investment. 'While there is plenty of water to go under the bridge over the next year, the OCR will likely begin to rise in late 2026 if the economy unfolds as expected, or perhaps sooner if the economy gathers steam more quickly than expected.' Cameron Smith is an Auckland-based business reporter. He joined the Herald in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace and macroeconomics.
The Advertiser
06-08-2025
- The Advertiser
'Severely unwell': 13-year-old exchange student's stabbing murder charge in court
A 13-year-old girl accused of stabbing and killing a 14-year-old exchange student at their host family's home was "severely unwell", a court has heard. The young girl, also an exchange student from China, was not required to appear at a children's court in NSW for the first time on a murder charge on August 6. Broadmeadow magistrate Andrew Eckhold raised her mental health issues because he said he had an independent obligation to consider referring the girl to a treatment facility. "This is a matter where there is a clear mental health nexus, but it's a very serious charge," he said. "It's an extraordinary number of medications this person is on for a 13-year-old." He said the document detailing the allegations and the list of medications indicated at this stage that the young person was "severely unwell". The 13-year-old made no application for release on bail and it was formally refused. Mr Eckhold ordered she remain in the juvenile justice system, which he said was well-resourced and highly sensitive to mental health issues. The girl will face court again in October, while detectives compile a brief of evidence in the meantime. In the complex case, a legal principle in NSW called 'doli incapax' is at play, which presumes children aged between 10 and 14 are incapable of forming a criminal intent. Emergency services were called to an address at Edgeworth at Lake Macquarie just before 10.30pm on Monday, August 4. Early investigations indicate the two girls, both exchange students from China, and the couple hosting them, had retired to their separate bedrooms for the night when the woman heard a commotion. She entered the older teenager's bedroom and found her with the one stab wound to her torso, police said. NSW Ambulance paramedics treated the girl before she was rushed to hospital in a critical condition, where she later died. Police arrested a 13-year-old girl at the scene and she was taken to Toronto police station. Officers also seized a kitchen knife for forensic examination. Detectives charged the girl with murder late on Tuesday night. Detectives from Lake Macquarie and the homicide squad, working under Strike Force Aggnes, have been investigating the circumstances of the fatal stabbing. Spoecialist officers have combed the crime scene at Edgeworth. The 13-year-old accused and the 14-year-old girl who died were both students visiting Australia from China, staying with a local couple at Edgeworth, attending school and visiting sites in the Hunter. They had been here for eight days and were due to leave on August 16. Police said they were not aware of any other relationship between the girls other than that they were part of the same exchange program and staying with the same host family. NSW Police have been working with the school the girls attended, the program facilitators and the Chinese consulate as they navigate the complications and complexities in the case. A 13-year-old girl accused of stabbing and killing a 14-year-old exchange student at their host family's home was "severely unwell", a court has heard. The young girl, also an exchange student from China, was not required to appear at a children's court in NSW for the first time on a murder charge on August 6. Broadmeadow magistrate Andrew Eckhold raised her mental health issues because he said he had an independent obligation to consider referring the girl to a treatment facility. "This is a matter where there is a clear mental health nexus, but it's a very serious charge," he said. "It's an extraordinary number of medications this person is on for a 13-year-old." He said the document detailing the allegations and the list of medications indicated at this stage that the young person was "severely unwell". The 13-year-old made no application for release on bail and it was formally refused. Mr Eckhold ordered she remain in the juvenile justice system, which he said was well-resourced and highly sensitive to mental health issues. The girl will face court again in October, while detectives compile a brief of evidence in the meantime. In the complex case, a legal principle in NSW called 'doli incapax' is at play, which presumes children aged between 10 and 14 are incapable of forming a criminal intent. Emergency services were called to an address at Edgeworth at Lake Macquarie just before 10.30pm on Monday, August 4. Early investigations indicate the two girls, both exchange students from China, and the couple hosting them, had retired to their separate bedrooms for the night when the woman heard a commotion. She entered the older teenager's bedroom and found her with the one stab wound to her torso, police said. NSW Ambulance paramedics treated the girl before she was rushed to hospital in a critical condition, where she later died. Police arrested a 13-year-old girl at the scene and she was taken to Toronto police station. Officers also seized a kitchen knife for forensic examination. Detectives charged the girl with murder late on Tuesday night. Detectives from Lake Macquarie and the homicide squad, working under Strike Force Aggnes, have been investigating the circumstances of the fatal stabbing. Spoecialist officers have combed the crime scene at Edgeworth. The 13-year-old accused and the 14-year-old girl who died were both students visiting Australia from China, staying with a local couple at Edgeworth, attending school and visiting sites in the Hunter. They had been here for eight days and were due to leave on August 16. Police said they were not aware of any other relationship between the girls other than that they were part of the same exchange program and staying with the same host family. NSW Police have been working with the school the girls attended, the program facilitators and the Chinese consulate as they navigate the complications and complexities in the case. A 13-year-old girl accused of stabbing and killing a 14-year-old exchange student at their host family's home was "severely unwell", a court has heard. The young girl, also an exchange student from China, was not required to appear at a children's court in NSW for the first time on a murder charge on August 6. Broadmeadow magistrate Andrew Eckhold raised her mental health issues because he said he had an independent obligation to consider referring the girl to a treatment facility. "This is a matter where there is a clear mental health nexus, but it's a very serious charge," he said. "It's an extraordinary number of medications this person is on for a 13-year-old." He said the document detailing the allegations and the list of medications indicated at this stage that the young person was "severely unwell". The 13-year-old made no application for release on bail and it was formally refused. Mr Eckhold ordered she remain in the juvenile justice system, which he said was well-resourced and highly sensitive to mental health issues. The girl will face court again in October, while detectives compile a brief of evidence in the meantime. In the complex case, a legal principle in NSW called 'doli incapax' is at play, which presumes children aged between 10 and 14 are incapable of forming a criminal intent. Emergency services were called to an address at Edgeworth at Lake Macquarie just before 10.30pm on Monday, August 4. Early investigations indicate the two girls, both exchange students from China, and the couple hosting them, had retired to their separate bedrooms for the night when the woman heard a commotion. She entered the older teenager's bedroom and found her with the one stab wound to her torso, police said. NSW Ambulance paramedics treated the girl before she was rushed to hospital in a critical condition, where she later died. Police arrested a 13-year-old girl at the scene and she was taken to Toronto police station. Officers also seized a kitchen knife for forensic examination. Detectives charged the girl with murder late on Tuesday night. Detectives from Lake Macquarie and the homicide squad, working under Strike Force Aggnes, have been investigating the circumstances of the fatal stabbing. Spoecialist officers have combed the crime scene at Edgeworth. The 13-year-old accused and the 14-year-old girl who died were both students visiting Australia from China, staying with a local couple at Edgeworth, attending school and visiting sites in the Hunter. They had been here for eight days and were due to leave on August 16. Police said they were not aware of any other relationship between the girls other than that they were part of the same exchange program and staying with the same host family. NSW Police have been working with the school the girls attended, the program facilitators and the Chinese consulate as they navigate the complications and complexities in the case. A 13-year-old girl accused of stabbing and killing a 14-year-old exchange student at their host family's home was "severely unwell", a court has heard. The young girl, also an exchange student from China, was not required to appear at a children's court in NSW for the first time on a murder charge on August 6. Broadmeadow magistrate Andrew Eckhold raised her mental health issues because he said he had an independent obligation to consider referring the girl to a treatment facility. "This is a matter where there is a clear mental health nexus, but it's a very serious charge," he said. "It's an extraordinary number of medications this person is on for a 13-year-old." He said the document detailing the allegations and the list of medications indicated at this stage that the young person was "severely unwell". The 13-year-old made no application for release on bail and it was formally refused. Mr Eckhold ordered she remain in the juvenile justice system, which he said was well-resourced and highly sensitive to mental health issues. The girl will face court again in October, while detectives compile a brief of evidence in the meantime. In the complex case, a legal principle in NSW called 'doli incapax' is at play, which presumes children aged between 10 and 14 are incapable of forming a criminal intent. Emergency services were called to an address at Edgeworth at Lake Macquarie just before 10.30pm on Monday, August 4. Early investigations indicate the two girls, both exchange students from China, and the couple hosting them, had retired to their separate bedrooms for the night when the woman heard a commotion. She entered the older teenager's bedroom and found her with the one stab wound to her torso, police said. NSW Ambulance paramedics treated the girl before she was rushed to hospital in a critical condition, where she later died. Police arrested a 13-year-old girl at the scene and she was taken to Toronto police station. Officers also seized a kitchen knife for forensic examination. Detectives charged the girl with murder late on Tuesday night. Detectives from Lake Macquarie and the homicide squad, working under Strike Force Aggnes, have been investigating the circumstances of the fatal stabbing. Spoecialist officers have combed the crime scene at Edgeworth. The 13-year-old accused and the 14-year-old girl who died were both students visiting Australia from China, staying with a local couple at Edgeworth, attending school and visiting sites in the Hunter. They had been here for eight days and were due to leave on August 16. Police said they were not aware of any other relationship between the girls other than that they were part of the same exchange program and staying with the same host family. NSW Police have been working with the school the girls attended, the program facilitators and the Chinese consulate as they navigate the complications and complexities in the case.
Scoop
13-05-2025
- Business
- Scoop
Westpac Economic Overview, May 2025 – Rolling With The Punches
Press Release – Westpac New Zealand The New Zealand economy continues to show pleasing signs of recovery, notwithstanding uncertainty created by developments in US tariff policy, Westpac NZ Chief Economist Kelly Eckhold said on the release of Westpacs May 2025 Economic Overview. Westpac has just released its May 2025 Economic Overview which discusses the outlook for the New Zealand economy and what it means for consumers and businesses. Overall outlook 'The New Zealand economy continues to show pleasing signs of recovery, notwithstanding uncertainty created by developments in US tariff policy', Westpac NZ Chief Economist Kelly Eckhold said on the release of Westpac's May 2025 Economic Overview. 'While there are downside risks that need to be carefully monitored, our baseline forecast is that the economy will gradually strengthen over coming quarters, supported by lower borrowing costs and much improved prices for key export commodities.' Mr Eckhold noted that the outlook remains clouded by uncertainty regarding the final form and global response to US tariff policy; the extent to which that would depress growth in some of New Zealand's key trading partners; and the impact on prices obtained for our key commodity exports. 'A downside scenario would moderate the recovery and could see the unemployment rate approach 6%,' said Mr Eckhold. 'We expect that the RBNZ will carefully balance downside risks to activity with the need to ensure that inflation settles close to the midpoint of the 1-3% target range. We forecast two more 25bps cuts to the OCR to a low point of 3% in the September quarter. The OCR will likely begin to rise in late 2026 if the economy unfolds as expected,' Mr Eckhold noted. Activity Mr Eckhold noted that indicators suggest that the economy has continued to find its feet. 'After two quarters of contraction in the middle of last year, a second quarter of positive GDP growth is estimated to have occurred in the March quarter,' said Mr Eckhold. 'Looking ahead, the disposable incomes of mortgage holders are now beginning to rise as they refinance at the much lower interest rates now on offer. And with much-improved commodity prices also boosting incomes in the rural sector, we expect growth in domestic spending to gather pace as this year progresses. Together with a lift in export volumes – including a further recovery in tourist arrivals – annual GDP growth should strengthen to 2.7% this year and around 2.8% in 2026.' Interest rates and inflation Mr Eckhold said that while inflation was likely to remain in the upper half of the 1-3% target range, the RBNZ was likely to reduce the OCR to 3% over coming meetings. 'We expect the RBNZ to deliver a 25bp cut in the OCR at the 28 May meeting. And given that uncertainties surrounding the global economic outlook are unlikely to quickly dissipate, a further 25bp cut seems more likely than not at either the July or August meetings.' Mr Eckhold noted that this is likely to be the low point for this cycle, with the RBNZ expected to be cautious as it seeks to support the economic recovery while not reigniting inflation pressures. 'While there is plenty of water to go under the bridge over the next 18 months, the OCR will likely begin to rise in late 2026 if the economy unfolds as expected,' Mr Eckhold added. External and primary sector outlook 'Despite the global uncertainty created by US tariff policy, the prices received for most of NZ's key export commodities have remained resilient in recent months. We reaffirm our forecast for the current season's farmgate milk price at $10.30/kgMS. And despite the recent rebound in the New Zealand dollar, our early forecast for the 2025/26 season remains $10.00kg/MS. Stronger primary sector earnings will be a boon to rural communities,' said Mr Eckhold. 'Stronger export prices and volumes – including a continued recovery in tourist inflows – should lead to significant narrowing of the current account deficit to around 3½% of GDP this year, compared with around 6% of GDP in 2024. In combination with the Government's fiscal strategy, this should take some downside pressure off New Zealand's sovereign credit rating', added Mr Eckhold. Households and businesses 'The squeeze on households' finances has begun to ease,' said Mr Eckhold. 'Around 80% of all mortgages will reprice at lower interest rates over the next 12 months, boosting disposable incomes for those households. Together with growth in rural incomes and growing consumer confidence as the labour market stabilises, this should provide a boost to household spending,' Mr Eckhold noted. 'Last year's downturn and growing spare capacity in the economy caused businesses to scale back investment spending. However, investment spending should begin to pick up later this year as businesses gear up for higher levels of demand. We also expect strong growth in investment spending in the public sector as the infrastructure deficit is addressed' Mr Eckhold added. Housing market outlook 'Mortgage interest rates have fallen significantly over the past year, driving a pickup in activity in the housing market. While a large inventory of homes for sale is presently constraining growth in house prices, we expect that annual house price growth will begin to lift towards 6% as that inventory is gradually worked through.' Mr Eckhold commented. 'A lift in prices for existing homes should support a recovery in residential construction activity from late this year. The resulting increases in housing supply should prevent growth in house prices running too far ahead of the growth in nominal incomes.' The labour market Mr Eckhold noted 'After declining last year, employment levels have broadly stabilised in recent months. Given ongoing growth in the labour force, the unemployment rate is expected to edge higher to a peak of around 5.3% this year, before beginning to trend down next year as the economic recovery gathers steam and hiring picks up.' Mr Eckhold added, 'Given the slack that has emerged, wage and salary growth in the private sector has moderated significantly over the past year and is now close to levels consistent with 2% inflation and trend productivity growth.' Fiscal policy Mr Eckhold said 'Government spending is expected to shrink relative to GDP, as the Government seeks to deliver on its strategy of returning the fiscal books to surplus. While it won't be a direct driver of growth, there is much the Government can do though regulatory policy and infrastructure investment to help unlock the growth potential of the economy.' Mr Eckhold added, 'Our forecasts imply a higher tax take than projected in the HYEFU, and almost certainly a higher tax take than will likely be unveiled in Budget 2025. If our forecasts play out, there may be scope for the Government to achieve a return to surplus while still spending a little more in priority areas.'. Significant uncertainties continue to cloud the outlook Mr Eckhold noted 'While our baseline forecast is a positive one, households, businesses and financial markets need to keep an open mind about how the economy will play out over coming quarters.' 'There remains significant uncertainty about the final form of US tariff policy and how this will impact global growth, inflation and financial markets. A downside scenario would moderate the recovery and could see the unemployment rate approach 6%,' said Mr Eckhold. 'We expect to gain more clarity over the next few months as trade negotiations take place and as economic data begins to cast light on how trading partner growth has been impacted by recent developments. There also continue to be other geopolitical risks that if realised could affect the economic outlook,' concluded Mr Eckhold.
Scoop
12-05-2025
- Business
- Scoop
Westpac Economic Overview, May 2025 – Rolling With The Punches
Press Release – Westpac New Zealand The New Zealand economy continues to show pleasing signs of recovery, notwithstanding uncertainty created by developments in US tariff policy, Westpac NZ Chief Economist Kelly Eckhold said on the release of Westpacs May 2025 Economic Overview. Westpac has just released its May 2025 Economic Overview which discusses the outlook for the New Zealand economy and what it means for consumers and businesses. Overall outlook 'The New Zealand economy continues to show pleasing signs of recovery, notwithstanding uncertainty created by developments in US tariff policy', Westpac NZ Chief Economist Kelly Eckhold said on the release of Westpac's May 2025 Economic Overview. 'While there are downside risks that need to be carefully monitored, our baseline forecast is that the economy will gradually strengthen over coming quarters, supported by lower borrowing costs and much improved prices for key export commodities.' Mr Eckhold noted that the outlook remains clouded by uncertainty regarding the final form and global response to US tariff policy; the extent to which that would depress growth in some of New Zealand's key trading partners; and the impact on prices obtained for our key commodity exports. 'A downside scenario would moderate the recovery and could see the unemployment rate approach 6%,' said Mr Eckhold. 'We expect that the RBNZ will carefully balance downside risks to activity with the need to ensure that inflation settles close to the midpoint of the 1-3% target range. We forecast two more 25bps cuts to the OCR to a low point of 3% in the September quarter. The OCR will likely begin to rise in late 2026 if the economy unfolds as expected,' Mr Eckhold noted. Activity Mr Eckhold noted that indicators suggest that the economy has continued to find its feet. 'After two quarters of contraction in the middle of last year, a second quarter of positive GDP growth is estimated to have occurred in the March quarter,' said Mr Eckhold. 'Looking ahead, the disposable incomes of mortgage holders are now beginning to rise as they refinance at the much lower interest rates now on offer. And with much-improved commodity prices also boosting incomes in the rural sector, we expect growth in domestic spending to gather pace as this year progresses. Together with a lift in export volumes – including a further recovery in tourist arrivals – annual GDP growth should strengthen to 2.7% this year and around 2.8% in 2026.' Interest rates and inflation Mr Eckhold said that while inflation was likely to remain in the upper half of the 1-3% target range, the RBNZ was likely to reduce the OCR to 3% over coming meetings. 'We expect the RBNZ to deliver a 25bp cut in the OCR at the 28 May meeting. And given that uncertainties surrounding the global economic outlook are unlikely to quickly dissipate, a further 25bp cut seems more likely than not at either the July or August meetings.' Mr Eckhold noted that this is likely to be the low point for this cycle, with the RBNZ expected to be cautious as it seeks to support the economic recovery while not reigniting inflation pressures. 'While there is plenty of water to go under the bridge over the next 18 months, the OCR will likely begin to rise in late 2026 if the economy unfolds as expected,' Mr Eckhold added. External and primary sector outlook 'Despite the global uncertainty created by US tariff policy, the prices received for most of NZ's key export commodities have remained resilient in recent months. We reaffirm our forecast for the current season's farmgate milk price at $10.30/kgMS. And despite the recent rebound in the New Zealand dollar, our early forecast for the 2025/26 season remains $10.00kg/MS. Stronger primary sector earnings will be a boon to rural communities,' said Mr Eckhold. 'Stronger export prices and volumes – including a continued recovery in tourist inflows – should lead to significant narrowing of the current account deficit to around 3½% of GDP this year, compared with around 6% of GDP in 2024. In combination with the Government's fiscal strategy, this should take some downside pressure off New Zealand's sovereign credit rating', added Mr Eckhold. Households and businesses 'The squeeze on households' finances has begun to ease,' said Mr Eckhold. 'Around 80% of all mortgages will reprice at lower interest rates over the next 12 months, boosting disposable incomes for those households. Together with growth in rural incomes and growing consumer confidence as the labour market stabilises, this should provide a boost to household spending,' Mr Eckhold noted. 'Last year's downturn and growing spare capacity in the economy caused businesses to scale back investment spending. However, investment spending should begin to pick up later this year as businesses gear up for higher levels of demand. We also expect strong growth in investment spending in the public sector as the infrastructure deficit is addressed' Mr Eckhold added. Housing market outlook 'Mortgage interest rates have fallen significantly over the past year, driving a pickup in activity in the housing market. While a large inventory of homes for sale is presently constraining growth in house prices, we expect that annual house price growth will begin to lift towards 6% as that inventory is gradually worked through.' Mr Eckhold commented. 'A lift in prices for existing homes should support a recovery in residential construction activity from late this year. The resulting increases in housing supply should prevent growth in house prices running too far ahead of the growth in nominal incomes.' The labour market Mr Eckhold noted 'After declining last year, employment levels have broadly stabilised in recent months. Given ongoing growth in the labour force, the unemployment rate is expected to edge higher to a peak of around 5.3% this year, before beginning to trend down next year as the economic recovery gathers steam and hiring picks up.' Mr Eckhold added, 'Given the slack that has emerged, wage and salary growth in the private sector has moderated significantly over the past year and is now close to levels consistent with 2% inflation and trend productivity growth.' Fiscal policy Mr Eckhold said 'Government spending is expected to shrink relative to GDP, as the Government seeks to deliver on its strategy of returning the fiscal books to surplus. While it won't be a direct driver of growth, there is much the Government can do though regulatory policy and infrastructure investment to help unlock the growth potential of the economy.' Mr Eckhold added, 'Our forecasts imply a higher tax take than projected in the HYEFU, and almost certainly a higher tax take than will likely be unveiled in Budget 2025. If our forecasts play out, there may be scope for the Government to achieve a return to surplus while still spending a little more in priority areas.'. Significant uncertainties continue to cloud the outlook Mr Eckhold noted 'While our baseline forecast is a positive one, households, businesses and financial markets need to keep an open mind about how the economy will play out over coming quarters.' 'There remains significant uncertainty about the final form of US tariff policy and how this will impact global growth, inflation and financial markets. A downside scenario would moderate the recovery and could see the unemployment rate approach 6%,' said Mr Eckhold. 'We expect to gain more clarity over the next few months as trade negotiations take place and as economic data begins to cast light on how trading partner growth has been impacted by recent developments. There also continue to be other geopolitical risks that if realised could affect the economic outlook,' concluded Mr Eckhold.
Scoop
12-05-2025
- Business
- Scoop
Westpac Economic Overview, May 2025 – Rolling With The Punches
Westpac has just released its May 2025 Economic Overview which discusses the outlook for the New Zealand economy and what it means for consumers and businesses. Overall outlook 'The New Zealand economy continues to show pleasing signs of recovery, notwithstanding uncertainty created by developments in US tariff policy', Westpac NZ Chief Economist Kelly Eckhold said on the release of Westpac's May 2025 Economic Overview. 'While there are downside risks that need to be carefully monitored, our baseline forecast is that the economy will gradually strengthen over coming quarters, supported by lower borrowing costs and much improved prices for key export commodities.' Mr Eckhold noted that the outlook remains clouded by uncertainty regarding the final form and global response to US tariff policy; the extent to which that would depress growth in some of New Zealand's key trading partners; and the impact on prices obtained for our key commodity exports. 'A downside scenario would moderate the recovery and could see the unemployment rate approach 6%,' said Mr Eckhold. 'We expect that the RBNZ will carefully balance downside risks to activity with the need to ensure that inflation settles close to the midpoint of the 1-3% target range. We forecast two more 25bps cuts to the OCR to a low point of 3% in the September quarter. The OCR will likely begin to rise in late 2026 if the economy unfolds as expected,' Mr Eckhold noted. Activity Mr Eckhold noted that indicators suggest that the economy has continued to find its feet. 'After two quarters of contraction in the middle of last year, a second quarter of positive GDP growth is estimated to have occurred in the March quarter,' said Mr Eckhold. 'Looking ahead, the disposable incomes of mortgage holders are now beginning to rise as they refinance at the much lower interest rates now on offer. And with much-improved commodity prices also boosting incomes in the rural sector, we expect growth in domestic spending to gather pace as this year progresses. Together with a lift in export volumes – including a further recovery in tourist arrivals – annual GDP growth should strengthen to 2.7% this year and around 2.8% in 2026.' Interest rates and inflation Mr Eckhold said that while inflation was likely to remain in the upper half of the 1-3% target range, the RBNZ was likely to reduce the OCR to 3% over coming meetings. 'We expect the RBNZ to deliver a 25bp cut in the OCR at the 28 May meeting. And given that uncertainties surrounding the global economic outlook are unlikely to quickly dissipate, a further 25bp cut seems more likely than not at either the July or August meetings.' Mr Eckhold noted that this is likely to be the low point for this cycle, with the RBNZ expected to be cautious as it seeks to support the economic recovery while not reigniting inflation pressures. 'While there is plenty of water to go under the bridge over the next 18 months, the OCR will likely begin to rise in late 2026 if the economy unfolds as expected,' Mr Eckhold added. External and primary sector outlook 'Despite the global uncertainty created by US tariff policy, the prices received for most of NZ's key export commodities have remained resilient in recent months. We reaffirm our forecast for the current season's farmgate milk price at $10.30/kgMS. And despite the recent rebound in the New Zealand dollar, our early forecast for the 2025/26 season remains $10.00kg/MS. Stronger primary sector earnings will be a boon to rural communities,' said Mr Eckhold. 'Stronger export prices and volumes – including a continued recovery in tourist inflows – should lead to significant narrowing of the current account deficit to around 3½% of GDP this year, compared with around 6% of GDP in 2024. In combination with the Government's fiscal strategy, this should take some downside pressure off New Zealand's sovereign credit rating', added Mr Eckhold. Households and businesses 'The squeeze on households' finances has begun to ease,' said Mr Eckhold. 'Around 80% of all mortgages will reprice at lower interest rates over the next 12 months, boosting disposable incomes for those households. Together with growth in rural incomes and growing consumer confidence as the labour market stabilises, this should provide a boost to household spending,' Mr Eckhold noted. 'Last year's downturn and growing spare capacity in the economy caused businesses to scale back investment spending. However, investment spending should begin to pick up later this year as businesses gear up for higher levels of demand. We also expect strong growth in investment spending in the public sector as the infrastructure deficit is addressed' Mr Eckhold added. Housing market outlook 'Mortgage interest rates have fallen significantly over the past year, driving a pickup in activity in the housing market. While a large inventory of homes for sale is presently constraining growth in house prices, we expect that annual house price growth will begin to lift towards 6% as that inventory is gradually worked through.' Mr Eckhold commented. 'A lift in prices for existing homes should support a recovery in residential construction activity from late this year. The resulting increases in housing supply should prevent growth in house prices running too far ahead of the growth in nominal incomes.' The labour market Mr Eckhold noted 'After declining last year, employment levels have broadly stabilised in recent months. Given ongoing growth in the labour force, the unemployment rate is expected to edge higher to a peak of around 5.3% this year, before beginning to trend down next year as the economic recovery gathers steam and hiring picks up.' Mr Eckhold added, 'Given the slack that has emerged, wage and salary growth in the private sector has moderated significantly over the past year and is now close to levels consistent with 2% inflation and trend productivity growth.' Fiscal policy Mr Eckhold said 'Government spending is expected to shrink relative to GDP, as the Government seeks to deliver on its strategy of returning the fiscal books to surplus. While it won't be a direct driver of growth, there is much the Government can do though regulatory policy and infrastructure investment to help unlock the growth potential of the economy.' Mr Eckhold added, 'Our forecasts imply a higher tax take than projected in the HYEFU, and almost certainly a higher tax take than will likely be unveiled in Budget 2025. If our forecasts play out, there may be scope for the Government to achieve a return to surplus while still spending a little more in priority areas.'. Significant uncertainties continue to cloud the outlook Mr Eckhold noted 'While our baseline forecast is a positive one, households, businesses and financial markets need to keep an open mind about how the economy will play out over coming quarters.' 'There remains significant uncertainty about the final form of US tariff policy and how this will impact global growth, inflation and financial markets. A downside scenario would moderate the recovery and could see the unemployment rate approach 6%,' said Mr Eckhold. 'We expect to gain more clarity over the next few months as trade negotiations take place and as economic data begins to cast light on how trading partner growth has been impacted by recent developments. There also continue to be other geopolitical risks that if realised could affect the economic outlook,' concluded Mr Eckhold.
