- RBNZ Governor Graeme Wheeler
New Zealand labour market followed the general trend in the economy and provided an upbeat picture as well, adding further to the case for the central bank to make another adjustment to the official cash rate. According to a report from the Statistics New Zealand, the nation's employers hired more workers than it was expected in three months through March, with more people entering the workforce. The number of people got employed over the period increased 0.9% or by 22,000 accelerating from the fourth quarter. Economists predicted a 0.6% gain, while previous quarter's increase was downwardly revised to 1.0%. At the same time, the unemployment rate remained unchanged at 6%, while analysts were making bets for a drop to 5.8%. Stronger hiring as well as a lift in the business confidence are suggesting that the pressure on wages and inflation will continue rising in the coming quarters, adding to signs the RBNZ will raise the OCR during the next meeting on June 12.
While fundamentals are speaking in favour of further tightening of the monetary policy, continuous appreciation of the kiwi will add a significant pressure on the economy. The RBNZ already pledged to intervene in the financial markets in case the kiwi will climb higher. It was not a surprise that the New Zealand Dollar dropped following Wheeler's comments, that raised doubts over future interest-rate moves.
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