‘…With the inflation environment looking firmer than it has been for the past few years, the RBNZ are likely to give a stronger signal that the next move in interest rates will be up.’ – Westpac (based on EconoTimes)
New Zealand’s long-term inflation expectations jumped above the RBNZ’s target mid-point of 2% in the second quarter of 2017, the latest quarterly survey revealed on Friday. The report suggested the Reserve Bank of New Zealand’s two-year inflation expectations soared to 2.2% in the Q2 from 1.92% in the previous quarter, while expectations tracked by the RBNZ’s one-year-ahead measure failed to breach the central bank’s 2% target, surging to 1.92% from 1.56% listed in the Q1 survey. Meanwhile, data revealed the country’s CPI advanced 1.1% in the first quarter, nearly double the rate observed in the final quarter of 2016, being boosted by easy monetary policy. Stronger inflation came as a surprise, as the economy continued to perform relatively mere, expanding just 0.4% in the first three months of 2017. Looking ahead, the country’s economic forecast remains quite vigorous, with economists eyeing a better-than-expected growth in New Zealand in the foreseeable future on the back of upbeat inflation and dashingly rising exports, which might compel policymakers to start hiking interest rates within the next 12 months.
