- China's government think-tank
The New Zealand Dollar weakened following the data release which showed local businesses cut their inflation expectations as economic growth slow from the rampant pace at the beginning of the year. The Kiwi Dollar declined to 78.19 US cents from 78.90 cents yesterday. The consumer price index is expected to climb an annual 1.59% on a mean basis in the year ahead, down from the 1.96% pace seen three months ago, the Reserve Bank of New Zealand's survey of expectations showed. Two-year inflation expectations were cut to 2.06% down from 2.23%, while respondents see a 0.26% increase in CPI in the final quarter of the year, followed by a 0.4% rise in March. The lower expectations make it easier for the RBNZ to postpone future interest rate lifts, which are already being questioned as official data shows lacklustre inflation.
The CPI rose at an annual pace of 1% in the third quarter, only just within the central bank's target band of between 1% and 3%. Strong inbound migration as well as the Kiwi's depreciation during that period had been expected to put pressure on consumer prices. The survey also revealed firms lowered their expectations for economic growth, with a one-year outlook on GDP growth rate of 2.7%, compared with 3.1% three months earlier. Two-year expectations declined to 2.5% from 2.7%.
© Dukascopy Bank SA