Sharechat Logo

Short-term inflation expectations lift in RBNZ survey

Tuesday 7th May 2019

Text too small?

Business managers and finance professionals lifted their short-term inflation expectations in the latest Reserve Bank survey but held their longer-dated view steady. 

Respondents to the central bank's quarterly survey predict consumer price inflation of 1.97 percent a year from now, up from the 1.82 percent rate expected in the March survey. Two-year expectations were for inflation of 2.01 percent versus 2.02 percent in the prior survey. 

A net 64.7 percent of respondents believe current monetary conditions are easier than neutral. That is down from a net 68.3 percent in the previous quarter’s survey.  "Easier than neutral" indicates rates which are low enough to stoke growth. 

The survey comes just ahead of the Reserve Bank of New Zealand's monetary policy statement and rate decision - the first to be made by committee - tomorrow afternoon.

Economists are on the fence as to whether the central bank might cut rates by 25 basis points to a record low 1.50 percent; markets are pricing in about a 60 percent chance.

"The decision will be a very close call, with strong arguments for both cutting and holding," Westpac Bank's head of NZ strategy Imre Speizer said. "The stronger argument is for cutting: the RBNZ has not met its inflation target for seven years."  

The survey's respondents trimmed their outlook for economic growth. They now expect GDP to rise an annual rate of 2.19 percent one year ahead, down from 2.38 percent in the prior survey. Two years ahead, they see it lifting at an annual rate of 2.17 percent versus 2.36 percent in the prior survey.

The unemployment rate is seen at 4.3 percent in one year and 4.32 percent in two years. The latest Stats NZ data had unemployment at 4.2 percent in the March quarter. 

One-year ahead expectations for annual growth in wages are steady around 2.89 percent, while two-year ahead expectations increased marginally from 2.86 percent to 2.93 percent in the latest survey.

(BusinessDesk)



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

AFT Pharmaceuticals starts to hit its straps
Crown seeks US$100m from Tui operator; Prospector moving on
Pacific Edge goes back to shareholders for another $20m
Crown seeks $100m from Tui operator Tamarind
Ryman underlying annual profit may rise by up to 17%
NZ dollar eases on increasing US-China doubts, lack of news in Fed minutes
From dog tucker to top dog: economists ask how Northport can be Auckland’s best replacement
MARKET CLOSE: NZ shares rise; Metlife jumps on takeover talk
NZ dollar eases on technical factors, buoyed by higher dairy prices
RBNZ eyes Westpac Australia money laundering failures

IRG See IRG research reports