Analysts at ANZ suggest that the New Zealand’s outlook for inflation is nuanced at present as core inflation has been inching up, but non-tradable inflation remains shy of where it needs to be.
Key Quotes
“The RBNZ were surprised to the upside on Q3 non-tradable inflation. But potential growth may be higher, meaning GDP needs to remain strong – and we think that will be a challenge. As such, capacity pressure may be past its peak at a time when firms are still grappling with lack of pricing power, weighing on inflation.”
“From the Reserve Bank’s perspective, capacity pressures still look pretty reasonable, inflation is still tracking up towards where it needs to be, and there are risks in both directions – meaning they can bide their time and wait and see how things unfold.”
“We think that the RBNZ will eventually come around to our view that more monetary stimulus will be required, but probably not just yet.”
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