Slowdown forecast

Softening commodity prices - in forestry and horticulture for some time, and more recently sheep and dairy - will help the economy decelerate further this year, the ASB Bank says.

The bank predicts New Zealand commodity prices will be relatively weaker than Australian commodity prices, and will probably lead to a lower exchange rate for the dollar against the Aussie in late 2006 and 2007.

The ASB predicts the Reserve Bank will again raise the cash rate on January 26 or March 9, and its economists are predicting a 0.25 per cent lift this month.