ECONOMICOUTLOOK
August2024
TheMonetaryPolicyStatement ataglance
•TheReserveBank’sMonetaryPolicyStatement(MPS)providesa quarterlypictureoftheNewZealandeconomyandwherewe thinkitisheadingnext.
•ItsetsouthowtheMPChassetmonetarypolicyandhowitplans todosointhefuture.
Economicgrowthislikelytobeweakover2024 beforepickingupin2025
ProductionGDP(quarterly,seasonallyadjusted)
UNCLASSIFIED
Source:StatsNZ,RBNZestimates.
GDP
per-capita is also weak but should improve
GDPper-capitaandnetworking-ageimmigration
Source:StatsNZ,RBNZestimates.
UNCLASSIFIED
Note:GDPper-capitahasbeennormalisedtoSeptember2019quarter.
QSBO-factorsmostlimitingproduction(seasonallyadjusted)
Source:NZIER,RBNZestimates.
Therearefewerjobvacanciesperunemployed person
Vacancy-unemploymentratio(seasonallyadjusted)
Source:StatsNZ,MBIE.
PrivatesectorLCIwagegrowth(annual)
Source:StatsNZ,RBNZestimates.
Globalinflationcontinuestodecline,andsome centralbankshavereducedtheirpolicyrate
Keytradingpartnerheadlineinflation
Source:HaverAnalytics,StatsNZ.
Medium-termmeasuresofinflationexpectations havereturnedtoaroundthe2%midpoint
Businessinflationexpectations(annual,yearsahead)
Source:RBNZSurveyofExpectations(Business).
Headlineinflationcontinuestodecline
CPIinflation(annual)
Source:StatsNZ,RBNZestimates.
Lowerinterestratescansustainablyreturn annualinflationto2percent
OCR(quarterlyaverage)
Source:RBNZestimates.
2024 Monetary Policy Challenge Question
If you were members of the Monetary Policy Committee what would you set the OCR to at the
Monetary Policy Review (MPR) in October?
In your response, consider what your central expectation/forecast is for inflation in the medium term (next 18-24 months). You should comment on the main factors that affect your outlook for economic activity and inflation and how you balance the competing pressures to form your central expectation. You should also comment on some important risks that could change your outlook for inflation and economic activity, and if those risks materialised, what would these do to the OCR.
You may find reading the most recent Monetary Policy Statement and the Monetary Policy Handbook helpful in forming your answer.