Rate relief needed to offset trade tension shocks, it says
Finsure Group has thrown its support behind additional cuts to the official cash rate (OCR), arguing that further easing from the Reserve Bank of New Zealand (RBNZ) will help sustain the country’s economic momentum and insulate it from global shocks.
With the RBNZ widely expected to lower the OCR from 3.75% to 3.50% at its policy review on Wednesday, Finsure NZ country manager Jenny Campbell said more cuts could be necessary.
This is particularly in light of recent global instability triggered by US President Donald Trump’s escalating trade war.
“We have been seeing positive signs across all the key sectors with property market values stabilising, listings increasing, and employment levels levelling off after a fall last year, while GDP is on the rise—albeit slowly,” Campbell said.
Finsure’s comments come as economists and business groups continue to call for supportive monetary policy. The latest NZIER Quarterly Survey of Business Opinion (QSBO) revealed that while confidence has improved, experienced trading activity remains weak, and cost pressures are rising against a backdrop of subdued demand and limited pricing power.
Additionally, the QSBO showed that a net 17% of businesses reduced staff during the March quarter, and investment intentions remain in negative territory. Businesses are holding back on hiring and capital expenditure as they await more certainty about the economic recovery, with many firms citing the need for clearer demand signals before committing to growth plans.
“In order to keep this positive momentum going, it’s likely the RBNZ will need to cut rates at least a couple more times, particularly if we are to protect ourselves from any uncertainty with a tumultuous global economy,” Campbell said.
Maintaining affordability and financial stability is crucial as Kiwi households and businesses navigate the impacts of global trade disruptions and rising import costs.
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