Category: Business

Source: Radio New Zealand

Class action has been filed against national grid operator Transpower and its maintenance contractor Omexom over the toppling of a power pylon in mid-2024 that cut power to the entire Northland region.

The legal action is being taken on behalf of the roughly 20,000 businesses affected by the outage and, if successful, could end up costing the two companies millions of dollars.

Hannah Brown, a partner in Sydney-based law firm Piper Alderman, said no specific sum was mentioned in the legal papers filed late on Wednesday – but an estimate last June by economic consultants Infometrics put the cost to businesses at $60 million while the Northland Chamber of Commerce gave a figure of $80m.

A report last year by Transpower found the pylon at Glorit, northwest of Auckland, fell over on 20 June last year when contractors removed the nuts from at least two of its legs at once.

Brown said a subsequent review by the Electricity Authority concluded the collapse was caused by “entirely avoidable” factors including inadequate procedures and training.

“This wasn’t just another power outage or an accidental or unforeseeable event like a weather event or a storm. It was something that was completely avoidable, and for that reason, we think those responsible should be held to account, and if they aren’t, that just breeds a sense of complacency in the future.”

The power cut affected about 180,000 people.

Most homes had power restored within seven hours but some large businesses, such as timber mills and dairy plants, lost more than three days’ worth of production while restaurants had to throw away spoiled food.

After pressure from Northland MP Grant McCallum and the local Chamber of Commerce, Transpower and Omexom each contributed $500,000 to a “resilience fund” for projects designed to lift the region’s economy.

However, Brown said that amount was “completely disproportionate and insufficient” given the actual losses suffered by Northland businesses.

Along with Piper Alderman, the class action was being run by New Zealand law firm LeeSalmonLong and bankrolled by litigation funder Omni Bridgeway.

Brown said it was intended to be an “opt-out” lawsuit, which meant all affected businesses would be included unless they chose not to take part.

There was no cost to businesses taking part, but if the “no win, no pay” class action was successful, the law firms and funder would take a commission.

Without class action, Brown said it was hard for individual businesses to take on the might and resources of a state-owned enterprise like Transpower or a large multinational such as Omexom.

Omexom’s France-based parent company, VINCI Group, declared net income of just under $10 billion last year.

“This is about giving businesses access to justice and an opportunity to group together to fight for compensation,” she said.

Class actions have been rare in New Zealand, and reputedly hard to win, in the past.

However, Brown said that was changing thanks to recent reforms making class actions more accessible.

Successful cases, such as the ASB’s settlement in a banking class action over disclosure breaches, showed the legal landscape was evolving.

She said the law firms were confident they had a strong case, much of which was built on Transpower and Electricity Authority reports.

“We wouldn’t be pursuing this if we didn’t believe it had strong prospects,” she said.

Northland businesses affected by the outage would be invited to register and provide information about their losses.

Some were already on board but now that the class action had been filed, it would be much easier to engage openly with affected businesses across Northland.

If the class action was successful, Brown said compensation would be distributed among those businesses in proportion to their losses.

A Transpower spokesman confirmed legal papers had been served on the company late on Wednesday, but would not comment given that the matter was before the courts.

Omexom could not be contacted.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

A new government rule aims to reduce hurdles for businesses developing new drones and other aviation technology.

It is part of a set of regulatory changes intended to cut red tape and help with setting up ‘sandboxes’ for rapid testing.

The government says strong safeguards will stay in place, but firms will no longer need approval for small changes to their technology from the Civil Aviation Authority.

“This will provide clearer pathways for the sector to test, trial, and grow, while ensuring strong safeguards remain in place,” Space Minister Judith Collins said in a statement on Wednesday.

It would directly benefit Tāwhaki National Aerospace Centre, which set up Special Use Airspace south of Christchurch earlier this year.

Other changes to regulations aimed to make it clearer when drones and similar technology can and can not be used.

For instance, some night operations would shift to a lower-risk category from a higher-risk one.

“They clarify that drones can be used for low-risk work like surveying and mapping without certification, and they provide clarity and certainty for technical and higher-risk activities like agricultural spraying and top dressing,” said Associate Transport Minister James Meager.

The rules comes into effect next month.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

As AI changes how we find information, New Zealand businesses are feeling the impact.

Over the past 20 years, search engines like Google replaced the Yellow Pages and changed the way information and services are found.

But AI overviews and chatbots are now ready to answer anything from “best time to travel to Japan” to “good local plumber”.

To Kiwi businesses, the change has not always been positive.

Greg Whitham – general manager for market engagement at Datacom – has decades of experience in digital communication.

He has watched the online presence of companies growing from a minor part of its strategy to something critical in capturing customers, and he is also familiar with how tech evolutions can affect businesses.

“We’ve definitely seen a dip in traffic coming onto our site, and I would imagine that there would be very few businesses or brands out there that haven’t sort of seen a significant drop off in traffic coming all the way through to their website.”

Whitham said the company’s website traffic changed dramatically this year, and they quickly adjusted to get AI’s attention.

“We’d certainly also seen an uplift in what we call zero-click impressions, so people were still seeing our content, but they were seeing it as it was being presented back to them by their AI agents. The new focus is almost less around servicing the customer and servicing the customer’s agents because it’s the customer’s agents that are effectively going to be presenting your brand, presenting your content back to what will hopefully become your end customer.”

Grant Johnson, chief executive of website company Rocketspark, said traffic from ChatGPT more than tripled this year.

It was growth that corresponded to the shift in how people seek information.

Johnson said in the age of AI-driven searches, online reputation was more important than just having the right keywords to get into Google’s top search results.

“What the LLMs are doing is they’re aggregating from so many different sources to build up a picture about you. It’s almost like, what’s your online reputation? Are you inviting your customers to leave reviews? Do you just provide a great service and a great product?”

He said reviews and recommendations in online discussions were playing an important role in AI-generated answers.

“It seems platforms like Reddit get referenced quite a bit in the AI summaries. So in some ways I feel like it’s leveling the playing field. If you’re a good business, it’s like the cream rises to the top.”

MoneyHub head of research Chris Walsh said his site was benefiting from artificial intelligence, as click rates grew.

“I don’t think this is taking anything away from us. I see the percentage month on month grow. But also, I’d say they’re quality visitors. I mean, they’ve gone to the AI, they’re engaged, and now they want to learn more and they’re probably going to spend about 10 minutes on our website.”

In September, links from AI tools sent more than 3000 visitors to the MoneyHub site – about one percent of their total traffic.

Walsh said while the percentage was low, the growth was promising.

Bret Gower – director of law firm Smith and Partners – said it was working to be quoted in the AI overview when people ask Google a legal question.

“We’ve done our own research into how Google’s AI overview references legal questions, and I’ve seen evidence of it citing our articles as a source of the basis of their answer. So I think that’s what we’re expecting. We’re going to continue to be doing it, hoping to be the cited source so that those clients that need a fact-specific answer or some certainty or even representation, they will be coming through to us as the provider of their answers in the first instance.”

Some other uses of AI were also causing other problems for businesses such as travel agents.

Travel Agents Association New Zealand chief executive Julie White said AI-generated travel plans or recommendations could ruin holidays.

“Just make sure you are well-informed and double-check and re-check the information that you’re getting (from AI) is correct. The White Lotus is a great example of people getting caught out booking through an AI. So they travel all the way to Thailand, they turn up for this magical experience to live the White Lotus experience, only to find out that the accommodation doesn’t even exist.”

And as Gower said, the trend towards AI DIY solutions was also causing headaches for lawyers.

“Anecdotally, we’re seeing a lot of clients coming to us with their own AI generated answers, I suppose in the same way that doctors were facing the Dr Google situation where the clients are turning up with a prior assessment of what their situation is.

“It’s making the work of advising clients more complicated because rather than them coming to us with an outline of what they think their issue is, they’re quite often coming to us now with an outline of what they think the solution is going to be as well. It’s interesting times.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

• RBNZ delivers expected 25 basis point rate to 2.25 percent
• It says patchy economic recovery justifies cut
• RBNZ expects inflation to ease towards 2 pct target next year
• Door left open for possible further cut
• Monetary committee voted 5-1 for a cut against hold

The Reserve Bank has cut the official cash rate to its lowest level in three years to support economic recovery.

The central bank dropped the rate by 25 basis points to 2.25 percent, the lowest since June 2022.

The bank’s rate setting committee says the economic recovery is patchy and slow but inflation is expected to ease next year, allowing another reduction.

The cut was expected and brings the OCR to a three-year low.

The cut was another split decision, which may be the last in the current cycle.

The central bank’s monetary policy committee (MPC) voted five to one for a smaller cut after October’s outsized 50 point reduction.

But it noted it did not want a delay in getting inflation back into the target band mid-point, and there was “low tolerance” in the achieving that.

“The committee noted that a reduction in the OCR would help to underpin consumer and business confidence and lean against the risk that the economy recovers more slowly than needed to meet the inflation objective.”

It said inflation – which is at the top of the RBNZ’s 1-3 percent target band – was expected to ease back given the spare capacity in the economy.

“Risks to the inflation outlook are balanced. Greater caution on the part of households and businesses could slow the pace of New Zealand’s economic recovery.

“Alternatively, the recovery could be faster and stronger than expected if domestic demand proves more responsive to lower interest rates. “

Door ajar for more cuts

Most economists expect the RBNZ has now finished its rate cutting, which has seen the OCR slashed by more than 3 percentage points from 5.5 percent in just over a year, but generally agreed that the RBNZ would leave itself flexibility if the economy continues to struggle.

The MPC said it looked hard between a cut now and staying on hold.

“Leaving the OCR unchanged at this meeting would provide the optionality to lower the OCR in the future if required.”

But it did not close the door to further easing.

“Future moves in the OCR will depend on how the outlook for medium-term inflation and the economy evolves.”

The next decision is due on 18 February, when the new governor Anna Breman will have taken up her role.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

Just minutes after the Reserve Bank revealed it would cut the official cash rate (OCR) by 25 basis points to 2.25 percent, advertised home loan rates started to drop.

The Co-Operative Bank said it was dropping its floating home loan rate by 31 basis points, more than the Reserve Bank reduction, to 4.99 percent.

Chief executive Mark Wilkshire said it “affirms our commitment to competitive interest rates”.

– more to come

– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

House prices are down, but rent rises have flattened.

In both markets, people looking for a home have the power.

So is it better, financially, to own or rent?

That’s a question that ANZ economist Matt Galt has been pondering.

He said how the cost of renting compared to home ownership was a big driver of house prices.

“The balance between the running costs of owning a home over time – interest, council rates, insurance – and rents is one of the main anchors for house prices, to which they gravitate.”

When the costs of owning a home are low compared to renting, both owner-occupiers and investors are more likely to buy, bidding up prices.

But when ownership costs are high relative to rents, house prices come under pressure.

To compare the cost of owning versus renting, he used the interest cost on a home loan with a 50 percent loan-to-value ratio at a five-year fixed rate, plus council rates, insurance, maintenance and a small buffer for other costs.

“What you often find is when you first buy a house, you have quite a big mortgage, like 80 percent loan-to-value for example, and when you have a big mortgage, the cost of owning a house will typically be quite a bit more than renting. But over the full time you own that house, hopefully you’ll be able to repay principal and the LVR will come down and what we find is that the cost of renting and the cost of owning are about equal when the loan is 50 percent of the house value and that might be the experience over a number of years for some people.”

In Auckland, the median rent is about $650 a week. Someone with a 20 percent deposit buying a house for $900,000 – the median price for first-home buyers in the city – would pay about $890 a week on a five-year fixed term.

But someone with a mortgage of $500,000 would be paying less than $620 as week.

He said between 2022 and 2024 high interest rates and other costs put downward pressure on house prices. At that point, it was a lot more expensive to own a house than to rent one.

But between 2019 and 2021, home ownership running costs were well below rents, which prompted some tenants to think they might as well buy if they could.

“I think a lot of people when they go to buy a house they’ll look at what they might be paying in rent versus what they’ll pay in mortgage and then they’ll add on perhaps council rates or insurance and other costs as they learn more about the types of housing they are wanting to buy. If owning a house does look very cheap, like when interest rates were low in 2019 and 2020, it would really encourage people to jump into the market and they did in large numbers despite prices being very high at that time,” Galt said.

“I think it does shape people’s housing choices and particularly for investors. as well. who will be quite carefully weighing up the rent income they receive versus the cost of owning a house.”

Things are now back in balance compared to where they have generally been over history.

“Home ownership running costs have since eased as interest rates have fallen and overall are now more or less back in line with their historical relationship with rents.

“Interest is the dominant cost and also the main source of variation,” he said. “The home ownership running costs proxy has dropped over the past month due to a sizeable fall in fixed mortgage rates over October.”

But the story is nuanced.

“Changes in interest costs reflect not only changes in interest rates but also changes in house prices, as the proxy is for buying a house now. Over 2021, both were rising, which explains the particularly sharp increase in home ownership costs over that period.”

Galt said several changes over the past year had brought ownership costs and rents back in balance.

“Home ownership costs have decreased as both house prices and interest rates have fallen, but this has been partly offset by increases in other ownership costs such as council rates and insurance. Rents have fallen a little, meaning home ownership costs have had to fall further to close the gap.

“The combination of falling rents and high council rates and insurance costs has been a significant drag on house prices in recent years, which has dampened the impact of falling interest rates,” he said,

He said it was likely that five-year mortgage interest rates would rise a bit from where they are now through next year, but the comparison between renting and owning was not likely to change a lot.

“Our forecasts anticipate home ownership costs and rents staying in balance over the next couple of years, which points to broad stability in house prices, potentially with a modest increase in prices as the economy experiences a cyclical recovery next year.

“The current balance of these costs and benefits of home ownership certainly doesn’t suggest that house prices are likely to race away.

“Overall, the market’s looking quite well balanced at the moment. We are expecting the ongoing costs of home ownership and rents to stay roughly around balance over the next couple of years and that just reflects interest rates staying relatively low.

“We do have them ticking up in our forecasts towards the end of 2026 but that’s very much a placeholder at this stage. The broad story is interest rates staying down for a while and house prices only increasing at a gradual rate next year as the economy recovers.”

Council rates were likely to rise at a slower rate, he said.

“They increased 12 percent a couple of years ago, that’s dropped to 9 percent and then we expect them to keep easing but still going up.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

New Zealand’s largest exporter Fisher & Paykel Healthcare has beaten expectations with a 39 percent increase in first-half net profit with revenue up 14 percent.

The respiratory appliance manufacturer’s first-half net profit for the period ended September was $213 million, with record revenue of $1.09 billion.

“This is a strong result against the backdrop of robust growth in the first half of last year,” managing director Lewis Gradon said.

“We saw broad-based strength across the Hospital consumables portfolio during a period of lower seasonal respiratory hospitalisations, and in Homecare, our latest range of masks for treating obstructive sleep apnea has performed well.”

Key numbers for the six months ended September compared with a year ago:

• Net profit $213m vs $153.2m
• Revenue $1.09b $951.2m
• Hospital operating profit $692.2m vs $591.4m
• Homecare operating profit $359.9 m vs $359.4m
• Operating margin 26.3% vs 22.9%
• Interim dividend 19 cents per share vs 18.5 cps

Gradon said efficiency gains contributed to an improved gross margin despite the recent impact of US tariffs on Hospital products sourced from New Zealand.

Looking ahead

The company also lifted its full year revenue and profit guidance by $20m.

The consensus for full year revenue was in a range of $2.15b to $2.25b, with net profit of $436m, which was near the top of its guidance range of $390m and $440m.

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Source: Radio New Zealand

Almost 20 percent of Auckland homeowners are selling their properties for a loss.

Cotality has released its latest Pain and Gain report, which shows the number of properties being sold for a gain or loss around the country.

It reveals that in the third quarter of this year, 87.8 percent of properties nationwide were sold for more than the sellers had previously paid for them.

That is down from 89.4 percent the previous quarter and is the largest percentage making a loss since 2013.

In Auckland, 18.2 percent of owner-occupier sellers are making a loss, and 22.8 percent of investors.

It is the highest percentage of losses among the main centres. In other areas, South Wairarapa had 32 percent making a loss in the quarter and Masterton 18.8 percent.

The data does not include the costs of sale, including real estate commission, so the number making losses is likely to be higher.

In Wellington, 13.4 percent of owner-occupiers and 20.9 percent of investors made a loss.

Cotality chief property economist Kelvin Davidson said the data was consistent with prices still being well off their peaks in many areas, and buyers having most of the pricing power.

“Both Auckland and Wellington went through very strong growth during the boom period, so more recent buyers paid top prices and are now more vulnerable. Auckland’s larger pool of apartments also contributes to its higher loss rate, although that reflects long-run performance rather than short-term weakness,” he said.

The national median resale gain in the third quarter was $270,000, down from the late-2021 peak of $440,000 but still higher than anything recorded before late 2020. The median loss was $50,000, slightly below that of the second quarter.

Davidson said the difference was how long people had held a property before they sold it.

The median length of time sellers had owned a property that sold for a gain was 9.5 years, compared to just under four years for those making a loss.

“The resale performance of property is not weak in an absolute sense, but the figures highlight the role of time in the market. Longer ownership provides a much greater likelihood of securing a capital gain.

“Three-and-a-bit years ago places you [were] at a point in the cycle when prices were extremely high and mortgage rates were already rising. Anyone who bought then and has since faced a change in circumstances is more exposed to selling at a lower price than expected.”

Standalone houses were less likely to sell at a loss than apartments.

They had a loss rate of 11.4 percent compared to 36.2 percent of apartments.

Queenstown Lakes was a standout in the data, with only 2.4 percent of sellers making a loss and a median gain of $486,000.

Davidson said while the data was weaker, it was not really weak. “If you look at the median gain of $270,000 most people would say that’s still pretty substantial. It is weaker than it’s been for quite some time but it’s not a complete blowout either. If you go back to the GFC around 2007, 2008, the share of resales made for a profit fell from pretty much 100 percent to close to 80 percent in about two years. This time it’s fallen from about 100 percent to about 90 percent in about four years. It’s been more of a slow burn.”

He said more people have been able to stretch out their mortgages to save cash. “It’s always going to be a bit lagged because if you think things have turned around …hold period is a big factor. Even if values have turned around in the past couple of months they are still 17 percent below where they were at the peak. Anybody who bought four years ago even if they have seen their property value tick up in the last few months there is still a likelihood of making a loss because they purchased at the peak of the market.”

He said anyone who bought at the peak might be in a difficult position for a few more years yet. “If you think we might get 4 percent or 5 percent growth maybe per year in the next three or four year the cycle itself could well be seven or eight years long. If you bought in 2021, perhaps the early months of 2022, that in hindsight was a difficult period to have made a purchase if circumstances changed and you’ve had to sell again in a short period of time.”

First-home buyers might particularly feel the impact if they had not been through property cycles before. “It’s all very well for people to say ‘oh well don’t’ worry about it you’ll ride the cycle out and house prices will rise’ but it’s very different if you’re in those shoes and you paid a price that was top dollar in 2021 and you’re still sitting on a paper loss four years later.”

The share of loss-making resales is expected to remain elevated in the near term, given the subdued market backdrop with outcomes to hinge on values, household sentiment and the volume of stock for sale.

“Vendors may need to meet the market, but gains will remain substantial for those who have held for a long period. Most owner-occupiers won’t see a cash windfall, as equity generally rolls straight into the next purchase unless they’re downsizing or moving to a cheaper location.”

There are early signs that rising sales volumes are reducing available stock, and the outlook for 2026 points to price growth supported by lower mortgage rates and a gradually strengthening economy.

“Property resellers may fare better in 2026, although a rapid turnaround looks unlikely,” Davidson said.

“Regions with strong affordability or tight supply, such as Queenstown Lakes and parts of the lower South Island, remain best placed to hold their ground.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

Falling interest rates are driving savers to look for other ways to get a better return on their money – but there’s a warning that they should understand the risks they are taking.

The Reserve Bank is expected to cut the official cash rate on Wednesday, which is good news for home loan borrowers but not so good for savers.

Households have $80.5 billion in savings accounts and $144b in term deposits. But from interest rate peaks, one-year term deposits have fallen from offering more than 6 percent to 3.5 percent.

Two-year rates have fallen from 5.75 percent to about 3.5 percent. Savings account rates have fallen from an average of more than 4.5 percent for conditional saving accounts including bonuses, according to the Reserve Bank, to less than 2 percent.

Unconditional savings account rates are now offering less than 1.5 percent on average – and much less in some cases.

Ana-Marie Lockyer, chief executive of Pie Funds, said her organisation was seeing increased interest from investors wondering what might give them a better return.

“With term-deposit rates falling in real terms, many investors are recognising that once inflation is taken into account, they’re effectively going backwards. That’s prompting some to look beyond traditional cash and term deposits in search of better long-term outcomes.

“At the same time, any move out of cash needs to be made carefully. Cash and conservative funds – or even other investments – each carry different levels of risk and are suited to different investment horizons. The key is ensuring investors are making decisions aligned with their goals, timeframes, and appetite for risk – not just reacting to the interest-rate environment. Our role is to help people navigate those choices so they can stay positioned for long-term financial wellbeing.”

MAS chief executive Jo McCauley said cash funds could be an option.

“Unlike term deposits, which lock money away and may penalise early withdrawals, a managed cash fund provides members with flexibility, potential for higher returns, and low risk – making them an attractive alternative for savers.”

She said there had been a 35 percent increase in new cash fund investments over the past six months.

Dean Anderson, founder of Kernel, said while term deposit balances were still near record highs, the growth had clearly stabilised. He said as people rolled off fixed rates they might wonder what to do.

“What you tend to find is term deposits, because they are locked up they tend to have a bit of a lag and then people tend to roll them into something else… what you see first is people pulling out of on-call savings accounts because they are more accessible and interest rates are falling.”

He said people who were reliant on interest income would need to look at other options. “If you are looking at rates that are 3 percent and then you take out tax and inflation you’re probably not getting a return that is going to meet your income needs.”

But he said there was no easy solution for investors. “We’ve got a housing market that’s flattened down, you’ve got a lot of media headlines that are talking about peaks in the share market and they’re probably thinking ‘where do I put my money?’ which may be why there is still this lag in term deposits coming down or savings because people are in that paralysis state and don’t know what else to do.”

He said people might “bury their heads in the sand” through Christmas and then think about it in the new year,

“I think the key call out here is, if they’re feeling concerned or it’s a bigger balance, financial advice is really key to help with this process.

“I think you’ve got to be cautious that they don’t just sort of jump on something as a FOMO (fear of missing out) because they’ve, you know, seen a great headline or past performance.”

Fisher Funds general manager of managed funds Robyn Conway said she was seeing a lot of people wanting to have conversations about managed funds and whether they were a suitable option.

“But term deposits as a comparison to managed funds are quite different in terms of how they operate.

“It is important that if someone is invested in a term deposit that they do speak to an adviser and ensure that a managed fund is right for them.

“Typically with a managed fund you’ll be investing for a certain period of time in order to reach the goals that you’re after from an investment perspective. And because they’re invested in share markets you do have to be aware of market volatility and there is a higher risk with managed funds as opposed to a term deposit which is more stable and people like that stability. If they are after certainty and a much shorter time frame for an investment, then a term deposit might be suitable but in saying that depending on what their goals are and what they are looking to achieve within a certain time period then a managed fund might be a good option to consider.”

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Source: Radio New Zealand

• Reserve Bank to deliver a 25 basis point cut to 2.25 percent
• Attention on how wide the RBNZ leaves the door open for more if needed
• Economy performing largely as forecast in August
• Last appearance of short term governor Christian Hawkesby
• New governor Anna Bremen starts on 1 December

The Reserve Bank is set to deliver a 25-basis-point cut to the official cash rate (OCR) to a three-year low, but attention will be on the central bank’s commentary and forecasts and how wide it leaves the door open for a further rate cut next year if needed.

The RBNZ has taken barely a year to cut the OCR from 5.5 percent to 2.5 percent, as it has tried to stimulate an economy going backwards while looking to control a revival of inflation pressures, which have edged to the top of the RBNZ’s 1-3 percent target band.

So is it one more cut and then an end to the easing cycle – the so-called ‘one and done’ strategy?

“Our base case is that November will bring the last OCR cut, but the risk remains for further easing in 2026,” ASB chief economist Nick Tuffley said.

“The statement’s forecasts and commentary will leave the door wide open for further easing if it is needed. Doing so will keep a lid on wholesale interest rates.”

Tuffley said such an approach would give the RBNZ breathing space to assess the state of the economy, and the strength of emerging signs of growth.

To an extent the RBNZ has boxed itself into a rate cut this week after saying in its October statement it was open to further cuts “as required for inflation to settle sustainably near the 2 percent target mid-point-in the medium term”.

Turning the economic corner

Partial indicators over the past two months have pointed to the economy turning the corner after it effectively stalled in the first half of the year.

BNZ head of research Stephen Toplis said a key question was how much slack – the output gap – was in the economy.

“Where it gets interesting is what does the RBNZ think is happening to potential growth?

“Net migration is coming in lower than the bank had assumed. Coupled with anecdotal evidence of increasing job shortages, this suggests that potential growth might need revising down again.”

Current picks for growth in the three months ended September range between 0.3 percent and 0.6 percent.

The slack in the economy is one factor expected to keep downward pressure on inflation.

HSBC chief economist for Australia and New Zealand Paul Bloxham said there were modest signs of an uptick in growth.

“Timely indicators of the manufacturing sector have risen for the past four months, and business sentiment has improved. Electronic card spending figures, building consents, and hours worked have all risen recently.”

He expected the RBNZ monetary policy committee to take a “dovish” tone in its statement with a clear signal that a further cut is on the cards.

The degree of dovishness will show through in its OCR rate track, which the RBNZ has said is only a signal of where the rate might be in coming meetings.

New year, new governor

The coming decision will be the last for governor Christian Hawkesby, who was rushed into the job after the abrupt and messy departure of Adrian Orr, added to by the departure of the chair of the RBNZ board, Neil Quigley.

Hawkesby was a candidate for the permanent appointment, losing out to Anna Bremen from the Swedish central bank who starts on 1 December.

It is expected in time he will return to private investment markets.

Bremen made much in her appointment news conference about the transparency of decision making.

“Will things at the RBNZ ever be the same again? A new governor starts next month who is likely to bring about a greater focus on transparency of the decisions made by the Monetary Policy Committee. We’ll see in February – OCR cut or not, ” Tuffley said.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand