"If we see opportunities to make a difference and create uncertainty about the future direction of the exchange rate in traders' minds, then we would be prepared to intervene"
- Graeme Wheeler, New Zealand central bank Governor
Europe and the United States are struggling from sluggish inflationary pressure, while Japanese policymakers are doing all things possible to end decades of deflation. Meanwhile, inflation expectations in New Zealand, remained stable and almost unchanged for the fourth quarter, even despite continuing improvement in the economy. A survey conducted by the pollster The Nielsen Co., showed that one-year expectations for CPI, which is the leading indicator of economic health, edged higher to 1.94% from 1.90% expected earlier and moved closer to a 2% level, considered by many central banks as a healthy pace of growth. As to the 24-month projections, inflation expectations stood at 2.34%, down from 2.36% in the preceding survey. The RBNZ is required to focus on inflation around 2% and within a 1% to 3% target band.
In the meantime, New Zealand central bank evaluates current policy as easy, and while looking ahead there is a progressive reduction in the number of respondents expecting the same approach next year. Couple of weeks earlier the RBNZ already pledged to pull the trigger next year. During September's policy meeting the RBNZ pledged to keep interest rate at current level for the rest of 2013, and introduced limits on low-deposit home loans in order to counter property inflation.
© Dukascopy Bank SA