In the Half Year Economic and Fiscal Update, the New Zealand Treasury has forecasted three-quarters of a shrinking economy starting in the second quarter of 2023.

Key notes

• Lifts planned bond issuance by nz$18bln over 4 years.
• Forecasts return to budget surplus in 2024-25.
• Fiscal policy will help RBNZ battle inflation.
• Government will run contractionary fiscal policy.
• To end cut in gasoline tax by March 31.
• Actual and expected inflation is too high and needs to be reduced.
• Expect spending to slow and unemployment levels to increase as more people join the workforce over the coming year.
• It is anticipated that the level of employment will remain high.
• Even with the expected slowdown in the period ahead, it is anticipated that the level of employment will remain high.

NZD/USD update

Fuelled by a softer US dollar, the Kiwi has managed a score into the 0.6500s through 0.6450 resistance ahead of today's Federal Open Market committee.