"If any more evidence was needed that the economy is now in recovery mode, this is it. In fact, people are the most upbeat about their finances that they have been in six years, and economic optimists now outnumber pessimists by the widest margin since December 2004. "
- Felix Delbrück, senior economist at Westpac
New Zealand's economy is on the right track. This bold statement could be made following the RBNZ last week's comments to pull the trigger in the first half of 2014, while on Monday a report from the Westpac McDermott Miller showed confidence among Kiwis soared to the highest level in four years in the fourth quarter. The corresponding index, which is based on the opinion of 1,500 consumers, advanced 4.7 point to 120.1 in the December quarter, with any reading above 100 suggesting optimism. The last time the measure exceeded the level of 120 was logged in December 2009. The main contributor to growth was the sub-index measuring financial situation, jumping to the highest since December 2007. The net percentage of respondents expecting their personal finances to improve next year increased to 12.1% from 9.6% in the preceding quarter.
Last week, the Reserve Bank of New Zealand stepped up its inflation-fighting rhetoric and pledged to start increasing interest rates in the first half of 2014. In a longer-term the appreciation of the kiwi is expected, keeping in mind the upcoming rate hike, as the RBNZ is needed to keep future inflation outlook around the 2% target midpoint. Vast majority of analysts believe the first rate hike will be made during March policy meeting, while for a whole 2014 they expect the RBNZ to push the key refinancing rate up to 3%.
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