The central bank's aggressive move to raise interest rates has finally pushed the New Zealand economy into recession after two consecutive quarters of contraction were recorded.
Data dominating the Asian session showed gross domestic product (GDP) fell 0.1% in the first quarter of 2023 (January-March) following a revised 0.7% contraction in the fourth quarter of 2022.
With two quarters of negative growth, the country officially fell into a technical recession.
On an annual basis, the New Zealand economy grew 2.2% in the first quarter compared to the expected growth of 2.6% and 2.3% in the previous reading.
The Reserve Bank of New Zealand (RBNZ) was the first central bank to start raising interest rates as inflation soared after the coronavirus pandemic hit.
Since October 2021, its official cash rate has been raised by 525 basis points until May to a 14-year high of 5.50%.
At last month's policy meeting, the RBNZ signaled that interest rates had reached their peak, signaling it was ready to end the tightening cycle.
In fact, before the first quarter GDP figures were released, the central bank had predicted that the country would experience a recession in the second quarter of 2023.
Even so, the weakness is not seen as a negative by the central bank, which says it needs economic growth to slow to lower inflation.
