New Zealand CPI rose 1.3% qoq in Q2, well above expectation of 0.7% qoq. For the 12-month. CPI accelerated to 3.3% yoy, up from 1.5% yoy, well above expectation of 2.8% yoy. The annual rate is the highest in nearly a decade. Also, the figures were well above RBNZ’s forecast of 0.6% qoq 2.6% yoy inflation.
Speculations of an early RBNZ hike intensified further after the release. Westpac now expects a hike in OCR by 0.25% in August, with another hike at both October and November meeting. The developments pushed AUD/NZD through 1.0597 support today to resume the near term fall from 1.0944. Deeper decline could be seen towards lower part of the medium term range at 1.0415.
