- ASB Bank
New Zealand inflation expectations rose slightly, the Reserve Bank of New Zealand latest quarterly survey showed, following the previous survey's unexpectedly weak outcome, and remained well below the mid-point of the RBNZ's target range. Expectations for New Zealand's consumer-price gains for the next 12 months climbed to 1.22% from 1.09% in the first quarter. Annual growth in the CPI is predicted to reach 1.6% in two years' time, unchanged from the first quarter.
Inflation expectations are a "key issue for monetary policy," the RBNZ said in a March press release, referring to a precipitous fall in expectations across a range of measures. The inflation rate rose slightly in the first quarter form a year earlier, thanks to an increase in house prices and associated costs. New Zealand's consumer price index edged up 0.4% annually in the first quarter, up from 0.1% in the final three months of 2015. The RBNZ left the official cash rate unchanged at 2.25% in April, but said further policy easing may be needed to ensure that future average inflation settles near the middle of the target range of 1% to 3%. According to ANZ New Zealand, the country's largest bank, the RBNZ could refrain from trimming interest rates until August, in light of the current pace of economic growth. New Zealand's economy grew 3.4% last year, significantly higher than countries in advanced Asia and the OECD.
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