BNZ has revised its unemployment rate forecast upward, now expecting joblessness to peak closer to 6 percent later this year as hiring intentions across the economy continue to soften. The bank's economists note that while the March quarter employment data, due for release Wednesday, is expected to show the unemployment rate holding steady at 5.3 percent, underlying labour market conditions are deteriorating.

The analysis suggests New Zealand's economy entered recent economic pressures with considerable disinflationary slack already present, indicating surplus capacity in the labour market. This existing slack is providing some buffer against immediate unemployment rises, but BNZ's revised forecast signals expectations of a more pronounced labour market weakening as the year progresses, reflecting broader economic headwinds affecting business confidence and hiring decisions.