NZ Economy Surpasses Expectations with 0.2% Growth, US Interest Rates Rise

The New Zealand economy has surpassed expectations by growing at 0.2% over the June quarter, according to recent data.

This is a significant increase compared to the market's and Reserve Bank's forecasts of 0.1%, 1.6%, and 2.2% respectively.

The construction sector played a major role in this growth, but consumer weakness was evident in sectors reliant on discretionary spending, such as retail.

In other news, the US Federal Reserve has raised interest rates for the first time in three years, taking the target range to 3.75-4%, up 25 basis points.

This move is aimed at quelling stubbornly high inflation and getting it back to the 2% target faster.

The Fed's updated forecasts suggest they are not overly worried about a worsening inflation outlook, but markets are pricing in more aggressive rate hikes, with one additional hike in 2026 signalled.