TL;DR: PM Christopher Luxon unveiled his 100 day plan yesterday with an avowed focus of reducing cost-of-living pressures, but his Government’s initial moves and promises are actually elevating inflation pressure, as the Reserve Bank’s Monetary Policy Statement and forecasts yesterday also showed.
The Reserve Bank surprised markets and economists yesterday with a warning it could raise interest rates again early next year because of higher housing costs from record-high migration and a lack of new homes, and the stimulatory effects of tax cuts.
The National-ACT-NZ First Coalition has promised to further loosen migration settings, freeze infrastructure and housing investment plans while it repeals Three Waters and the RMA, and accelerates its tax cuts for landlords. All of these moves would amplify the inflationary effects of higher rents, rates and services costs rippling through the economy, as the RBNZ laid out in its forecasts.
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