Doubt lingers over tariffs, trade uncertainty and inflation
New Zealand is facing uncertain times, with no one quite sure what impact the global trade war will have on interest rates and property prices, said CoreLogic Chief Property Economist Kelvin Davidson.
The Monetary Policy Committee( MPC) of the Reserve Bank of New Zealand( RBNZ) reduced the Official Cash Rate( OCR) from 3.75 per cent to 3.50 per cent in April, which was widely expected given that domestic inflation remains on the radar of policymakers and that the economy is still subdued.
Despite market pricing’ s further rate cuts of as low as 2.50 per cent, the MPC’ s accompanying statement, which discussed tariffs and their possible effects, confirmed that it’ s too early to say what will come next.
“ In a nutshell, uncertainty remains high, but the central view right now is that inflation effects are not clearcut; a weaker New Zealand dollar could raise imported inflation, but a diversion of goods away from the U. S. and towards New Zealand by large global exporters could work in the opposite direction,”
Kelvin Davidson Chief Property Economist, CoreLogic New Zealand
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