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According to bank economists, NZ’s latest inflation stats make it clear it’s far too soon think about dropping interest rates. But the Chief, David Cunningham, reckons the official numbers don’t paint an accurate picture of the situation.

New research from the RBNZ highlights the four key indicators that (it believes) give us the best idea of where inflation is at, and where it's headed. But Squirrel guest blogger, Rodney Dickens, reckons it's the RBNZ's judgement that needs work more than anything.

Most commentators are picking it'll be late 2024 (or worse, 2025) before interest rates start falling again — but the Chief, David Cunningham, reckons there's a strong case for the RBNZ to begin dropping rates much sooner.

Once inflation's got its hooks in, it can take years for interest rate hikes to trickle through and reverse the damage. But, as Rodney Dickens explains, a more proactive approach from the RBNZ could go a long way to solving that problem.

Price rises in recent years have hit some areas much harder than others - and Squirrel guest blogger, Rodney Dickens, reckons the government's got something to do with that (and not in a good way).

The Reserve Bank is giving nothing away ahead of its first Official Cash Rate announcement of the year, in late February, but the market is increasingly anticipating rate falls to start sometime this year.

With NZ's latest inflation numbers out in late January, it looks like we're finally winning the battle — and we could see annual inflation come down relatively quickly in the coming months. So what would that mean for interest rates?

Put really simply, the Official Cash Rate is the interest rate that the banks earn on any money they’re holding with the Reserve Bank, and the rate they pay if they need to borrow funds.

Central banks the world over have a bit of a bad habit of reactionary decision making. After overstimulating the economy big time when the pandemic hit by dropping rates to record lows, they were much too slow to jack rates up again when inflation started running rampant. And it's created such a big mess that Squirrel guest blogger, Rodney Dickens, reckons we're in for an extended battle to get us out of it again.

It came as no surprise to anyone in the world of economics and financial markets this week when the Reserve Bank left its official cash rate unchanged at 5.5%.

Sticking to the path it laid out for us in July, the RBNZ has opted to hold the OCR steady at 5.50% - and they're saying it might be 2025 before rates start to come down again. But global uncertainties, deflationary forces in China and the upcoming election has everyone holding their breath.

The RBNZ's hard-line approach to rate hikes seems to have inflation (slowly but surely) tracking in the right direction. But according to Squirrel guest blogger, Rodney Dickens, there's one factor in particular which is going to make it a long, tough road to get us back where we need to be.