-Gary Dunnet, national accounts manager at the statistics office
The RBNZ will take a pause in July? Perhaps, but after this week's GDP report that showed the economy expanded at the fastest rate in six years in the first quarter, the central bank will feel more comfortable to proceed with the tightening of the monetary policy.
Statistics New Zealand said the economic output soared 1% in the first three months, following an upwardly revised 0.9% growth a quarter earlier, however, missing expectations of a 1.1% increase. On a yearly basis the economy expanded 3.8% in the March quarter, outpacing analysts' predictions. Building work in quake-damaged Christchurch provided the main boost to the economy, as construction activity reached a new record high, posting a 12.5% growth. At the same time, mining output also provided a solid support, rising 6.3% over the observed period. In contrast, the wholesale trade slightly offset GDP performance, by contracting 1.5% in the quarter. Despite solid figures, the kiwi fell 0.19% versus the greenback, with the NZD/USD pair hitting 0.8708.
In June Graeme Wheeler made another adjustment to the official cash rate, bringing it to 3.25%. His actions come in contrast to other developed economies around the globe, which are still grappling with the time and the course of the monetary policy against a backdrop of tepid growth and sluggish inflation.
© Dukascopy Bank SA