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After 500 basis points of rate increases, monetary policy is starting to slow New Zealand’s economy and a recession is likely this year, said ANZ. “The Australian economy has been more resilient after 375 basis points of tightening, and we expect Australia will achieve a soft landing,” it said.

The bank expects a final quarter of a point increase in both countries, taking the RBA cash rate to 4.1 per cent and the RBNZ benchmark to 5.5 per cent.the RBA’s higher tolerance for a prolonged period of above-target inflation to preserve labour market gains,the faster transmission of monetary policy in Australia,

the fact interest rate increases are more impactful in Australia as household debt makes up about 123 per cent of GDP versus 98 per cent in NZ. ANZ forecasts rates to stay elevated for longer and expects rate cuts only in the second half of next year.

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