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NZ CPI: There’s bite in that bark – TDS

Annette Beacher, chief Asia-Pacific macro strategist at TD Securities, points out that New Zealand’s December quarter CPI rose by +0.1%/q, a shade above TD/market expectations for a flat print and disappointed those looking for a small fall.

Key Quotes

“More importantly, the annual rate of 1.9%/y is barely discernable from the RBNZ’s 2% forecast as published in the November Monetary Policy Statement (MPS) despite the slump in fuel prices in between.”

“Inflation is close to the mid-point of the RBNZ’s 1-3% target range and the other half of the RBNZ’s dual mandate – generating “maximum sustainable employment” – has also been achieved. This combination mitigates rising chatter of OCR cuts.”

“We remain of the view that the next move is up for the cash rate as the RBNZ’s mandate has been achieved.”

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