“Expectations for a -25bp rate cut in July have been effectively ruled out,” said senior trader Ross Weston. “For now, it’s a case of watch, worry, and wait.”
NZ recovery powered by exports, but risks remain
Tuffley said the New Zealand economy has been “turbocharged” by strong exports including dairy, beef, and fruit, as well as a modest tourism recovery. However, domestic demand remains sluggish.
“There has been some lift in spending, but spending on durable goods remains down 4% year to date,” he said, noting that homebuyers are still cautious and mortgage rate cuts have not yet meaningfully lifted the property market.
Construction may have found its trough, and the government’s “Investment Boost” policy could support capital expenditure. “We expect the economy will gradually lift to a 2-2.5% pace of growth heading through 2026, though tariffs could slow this pick-up,” Tuffley said.
Tariff turmoil clouds global outlook
ASB warns that global growth forecasts have weakened significantly due to the US-led “Liberation Day” tariffs, which are currently paused. July 9 and Aug. 12 are key deadlines to determine whether tariffs will increase again.