In a prolonged crisis to Christmas, GDP could be about $2.9b lower, with household consumption down $6.3b, it says.
A July OCR rate hike is a ‘live’ option as hopes build for reopening of Strait of Hormuz.
Two-fifths of the deficit is cyclical, says the Treasury.
Optimistic forecasts show the economy growing and inflation coming down after the ‘temporary’ fuel price shock.
But Kiwibank chief economist Jarrod Kerr warns the RBNZ is risking a lot to gain a little.
Three external members of the Monetary Policy Committee wanted to hike the OCR to 2.5%.
Business optimism remains fragile while the economic recovery gets pushed to 2027.
The cracks are starting to show as businesses feel the cost pressure of the conflict.
Green Party co-leader Chlöe Swarbrick also questions whether a softer housing market could impact lending to small businesses.
There is no system-wide mechanism for sharing individual insurance policy changes with banks.