New Zealand Treasury sees RBNZ raising rates from mid-2018

New Zealand pre-electon Economic cand Fiscal update [PREFU] released today shows the Treasury expects the Reserve Bank of New Zealand [RBNZ] to kick-off  the tightening cycle in mid-2018. 

Key points

Raises 2016-17 budget surplus estimate to NZD 3.71 billion

Leaves 2017-18 surplus forecast little changed and sees a smaller surplus in 2019-21 on lower growth

Will not consider tax cuts until 2020 unless economic conditions are better than anticipated

Sees 2017/18 year GDP growth at 3.5 pct (budget forecast 3.7 pct)

Sees 2016/17 net debt 22.5 pct of GDP (budget forecast 23.2 pct)