At least some of the startling fall in the unemployment rate in New Zealand in the fourth quarter of last year, from 6.0% to 5.3%, appears genuine. As such, we no longer think that the unemployment rate will climb to a peak of 6.3%. While this reduces the chances of further interest rate cuts, we’re not convinced it will prevent the RBNZ from cutting rates from 2.5% to 2.0% later this year.
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