-Ben Jarman, JP Morgan economist
The New Zealand Dollar weakened versus the Greenback after the release of inflation data, which disappointed market participants to the downside. Inflation slowed more than expected in the third quarter and the RBNZ forecast, giving Governor Graeme Wheeler ample room to keep borrowing costs on hold for longer following four lifts between March and July this year. The consumer price index climbed 1% in the three months through September from the previous year, following a 1.6% rise in the previous quarter, Statistics New Zealand reported. The reading fell considerably below the central bank prediction of 1.3%. The economy has been growing strongly for some time now, yet inflationary pressures remain surprisingly well contained. The New Zealand Dollar dropped to 78.71 U.S. cents from 79.09 cents immediately before the release.
Governor Wheeler on 11 September said the central bank will keep rates unchanged for an extended period to evaluate how a previously strong nation's currency, falling commodity prices and earlier tightening would affect the New Zealand economy. The RBNZ lowered its inflation outlook, predicting it will not reach the midpoint of the 1%-3% target band until the second half of 2016, a year later than it forecasted in June.
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