There’s some good news for businesses as recent signs suggest the Reserve Bank of New Zealand (RBNZ) can be confident inflation will fall below 3% over the second half of 2024 and remain well contained in the target 1% to 3% range beyond this year.
ASB economist Mick Tuffley believes the RBNZ will continue to steadily cut the Official Cash Rate (OCR) in 25 basis point moves from the current rate of 5.25% to around 3.25% in late 2025. However, the exact timing will be dependent on how economic and inflation data trends over this period.
Bit by bit, the world is getting on top of inflation, and a fairly synchronised easing cycle of lowering interest rates and lowering inflation is now underway.
Meanwhile the ANZ Business Outlook survey shows business confidence is slowly improving, which could be a response to the anticipated OCR cuts. However, business confidence overall is still weak at this point.
For businesses, figuring out how to “survive to ‘25”, and even “thrive in ‘25” will be important. At the very least, business owners should be thinking about how they will react to the eventual economic recovery. So it’s a good time to start planning for this now.
