NZ inflation expectations drift further below 2% mid-point

Tuesday 17th November 2015

Longer term inflation expectations weakened marginally in the latest Reserve Bank of New Zealand survey of expectations, with annual consumers price inflation expected to be 1.85 percent in two years' time, compared with an expectation of 1.94 percent for the same measure in the September survey.

For the year to December 2016, inflation expectations rose slightly to 1.51 percent, from an expected 1.46 percent three months earlier.

"This tick down in inflation expectations was too small to be of any great consequence," said Westpac New Zealand chief economist Dominick Stephens in a note.

Nonetheless, the bank was surprised at the stability of inflation expectations at around the mid-point of the RBNZ's target band of 1-to-3 percent annual inflation over the last year, given how long the actual measure has remained below 1 percent.

With financial markets focusing on whether the RBNZ will cut the official cash rate by a further quarter point in next month's monetary policy statement, Westpac said today's figures were unlikely to concern the central bank.

BusinessDesk.co.nz

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