A warning of tough times ahead for our economy

Business confidence is back down to March 2020 levels, with 62 percent of businesses expecting economic conditions to deteriorate

ASB Senior Economist Mark Smith says we could start to see stagflation-like conditions.

That means falling economic activity, rising inflation and increasing unemployment.

Smith says the Reserve Bank will probably react by increasing the official cash rate.

He says we will probably see a 50 basis point hike next week, and he thinks it will peak at 3.5 percent by the end of the year.