New Zealand is likely to continue slowing in the near term as monetary tightening takes hold. Inflation is declining but will remain high for a while. The current account balance has deteriorated significantly, reflecting excess demand and one-off factors. Macroeconomic policies should retain a restrictive bias. Fiscal policy should prioritize the recovery from the floods and cyclone, while limiting other discretionary spending. The monetary policy stance is appropriate and should aim to bring inflation to target. The housing market appears to be stabilizing, though housing affordability concerns remain. Boosting ... (full story)