(Bloomberg) -- New Zealand’s government debt is looking more appealing than its Australian counterpart as the nation’s central bank may start cutting rates soon, according to a top-performing fund manager. 

A struggling economy will likely force the Reserve Bank of New Zealand to signal a pivot, making it a “a more preferable rates place,” Richard Quin, chief investment officer at Bentham Asset Management Pty., which manages A$7.5 billion ($5 billion) in assets, said in an interview. 

Quin, whose flagship fund has beaten 92% of peers in the past three years, said he has shifted money into the “mid-part” of New Zealand’s yield curve from Australia.

Traders are betting the central bank will remain on hold at its policy meeting Wednesday to combat sticky inflation, with an easing likely later this year. The RBNZ has held its policy rate at 5.5% — the highest since 2008 — for a year, hurting consumer demand and the labor market. 

Read More: Kiwi Looks to RBNZ Rate Decision to Build on Bullish Momentum

Cuts may come sooner with inflation showing signs of easing and economic activity likely to drop significantly as the lagged effect of previous rate hikes starts to bite, according to Quin.

“New Zealand has only just started to hit that real danger zone and things are starting to look a little bit nasty,” he said. If Governor Adrian Orr doesn’t cut quickly when activity slides, the risks are that he will face “an economy that tanks pretty hard,” Quin added. 

Meanwhile, sticky inflation spurred the Reserve Bank of Australia to resume the discussion of an interest-rate hike at its May meeting. The Australian central bank last raised rates in November to 4.35%. 

Australia likely has another six months before the full effects of its rate hikes take effect, whereas the recession is starting to bite in New Zealand, Quin said. 

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