ASB Bank of New Zealand: The budget increases the risk of a 50 basis point rate hike by RBNZ

New Zealand’s fiscal budget shows that government spending is expected to decline as a percentage of GDP, but fiscal stimulus will reach nearly 2% of GDP between 2023 and 2024, said Mark Smith, senior economist at New Zealand’s ASB Bank. .

New Zealand’s government spending has soared in recent years, and it has been difficult to justify imitating fiscal prudence. Fiscal policy does not present an obstacle to the New Zealand official cash rate rising to higher levels in the near future, and instead increases the risk of a 50 basis point hike in May.