ANZ says the RBNZ has no tolerance for delays in the return of inflation to target

ANZ note that the latest CPI data from New Zealand, released this week, was lower but due to the composition “we aren’t expecting
these data to materially change the RBNZ’s inflation outlook.”

  • tradables disinflation
    continues to bring down headline inflation
  • But given the volatility, the RBNZ
    needs to see more progress on non-tradables inflation to be confident
    overall inflation is returning to target in a sustainable timeframe
  • The RBNZ’s Q1 Survey of Expectations was also out this week … While 1yr ahead inflation
    expectations fell from 3.60% to 3.22%, that is 0.7%pts higher than the
    RBNZ’s inflation forecast for 1 year ahead, with the RBNZ expecting annual
    inflation to be comfortably back in the 1-3% target band by year end.
  • We are not discounting the progress in this week’s data, but in the context
    of an impatient Monetary Policy Committee with no tolerance for delays in
    the return of inflation to target, these data certainly weren’t a ‘slam dunk’ to
    rule out the need for further increases to the OCR

ANZ expect more rate hikes from the Reserve Bank of New Zealand:


This article was written by Eamonn Sheridan at Source