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ANZ analysts note that New Zealand’s CPI increased 0.7% q/q in Q3, in line with ANZ forecasts, but stronger than the market or RBNZ expected.

Key Quotes

“Annual inflation moved further away from the RBNZ’s 2% target midpoint, ticking back down to 1.5% y/y from 1.7%. Core measures of inflation moved sideways, short of 2%.”

“The RBNZ may find a glimmer of hope in the rise in domestic (non-tradable) inflation to 3.2% y/y. But the RBNZ’s focus will remain on the slowing economy, which will see inflation continue to fall short over the next year. To support the inflation outlook, we’re expecting cuts in November, February, and May, taking the OCR down to 0.25%.”