IMF Staff Country Reports

The 2025 Article IV Consultation with New Zealand discusses that tight monetary policy has helped bring inflation back to target after a prolonged period of elevated price pressures, but at the expense of growth. A nascent recovery is underway as monetary policy is easing again. House prices have stabilized, and financial sector risks are contained. is expected to remain within the target band, and current account normalization is set to continue. Risks to the outlook are to the downside, weighing New Zealand’s exposure to trade policy and investment shocks against the potential for stronger monetary policy passthrough. The financial system is resilient with well-capitalized banks, and the ongoing modernization of the regulatory framework should continue. Financial stability considerations should take precedence when determining prudential settings. Structural policies remain a first order priority to address persistently low productivity growth and housing supply constraints. Reforms to improve competition, broaden available sources of funding for businesses, and reduce infrastructure gaps are critical for securing sustainable long-term growth.