Central Banks
Australia’s Next Door Neighbor Shows RBA What Restrictive Means
- RBNZ’s tighter monetary policy curbing demand across economy
- RBA could hike in August while RBNZ may start to signal easing
The RBNZ’s policy tightening has taken the wind out of New Zealand’s housing market, where prices declined for the third straight month in June after falling for most of last year.
Photographer: Mark Coote/BloombergThis article is for subscribers only.
As Australia’s central bank contemplates whether its monetary policy is “sufficiently restrictive,” a glance across the Tasman Sea might prove instructive.
New Zealand’s Reserve Bank on Wednesday unexpectedly opened the door to interest rate cuts, with its tighter policy stance curbing demand across the economy and boosting confidence that inflation will return to target. By contrast, traders see a real risk that the Reserve Bank of Australia will raise rates at its next decision on Aug. 6 as inflation is stickier than anticipated.