New Zealand’s Finance Minister Confident About Economic Turnaround

New Zealand's Finance Minister Nicola Willis expressed optimism about the country's economy, stating that she believes the economy has resumed growth in the last quarter, as the interest rate cut has helped boost market confidence.

“When it comes to the fundamentals, inflation back in band and interest rates are coming down, we are there,” Willis said at the Bloomberg Address in Auckland on Friday. “We’ve had some growth returning and we want to see that sustained. All of my forecasters tell me I should be confident.”

This week, the Reserve Bank delivered a larger-than-expected 50 basis-point rate cut to take the benchmark to 2.5% and said it was open to further reductions. Most economists see the Official Cash Rate dropping to 2.25% by the end of this year.

New Zealand's economy contracted by 0.9% in the second quarter. Willis said that the Ministry of Finance had informed her that the relevant data might be revised to show a smaller contraction.

Willis said in an earlier interview with Bloomberg Television that the government is working alongside the RBNZ “by ensuring that our fiscal settings give them that room to move on interest rates, by ensuring that we are not overstimulating the economy and that we have a path of fiscal consolidation.”

Generating growth is crucial for Willis and the government, which faces an election in late 2026. The budget is in deficit and is projected to remain like that until 2029, limiting the scope for fresh spending or tax initiatives to attract voters.

Willis once stated that she hoped to achieve a budget surplus ahead of 2028, and she reiterated this on Friday, emphasizing that it remains the government's "financial goal".

“We’ve charted a path that gets us there and we are confident that that surplus path is achievable with fiscal discipline.”