The New Zealand labour market modestly cooled in the December quarter but was stronger than the Reserve Bank and most economists expected.

The Reserve Bank is not likely to be comfortable with slow easing in labour market pressures. It will, therefore, likely maintain its vigilant monetary policy stance at its 28 February meeting.

Double-Dipping Summary With a mild contraction in the September and December quarters, the New Zealand economy entered a double-dip recession.

The Reserve Bank of New Zealand Monetary Policy Committee decided to hold the line, keeping the Official Cash Rate at 5.5% and maintaining an Official Cash Rate outlook similar to its November forecasts.

It appears the RBNZ now has a more balanced view on inflation pressures than its ultra-vigilant November statement and subsequent communications had led us to believe.

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