Economic Note: RBNZ Speech on NZ’s Economic Expansion

RBNZ Governor Wheeler has delivered a speech titled “Some Thoughts on NZ’s Economic Expansion”. There are no implications to our OCR view; we continue to expect the RBNZ will hold the OCR at 1.75% for the foreseeable future. The comments echoed those already delivered in the November Monetary Policy Statement and Financial Stability Report.

The speech outlines what the key drivers of the most recent expansion have been and offers some explanation as to why per-capita growth has been weaker than a typical expansion. The Governor concludes by discussing the key risks to the current outlook, which are largely international-sourced risks. However, the Governor remains wary of the domestic-sourced risk of a sharp fall in house prices.