21 Jan 2015
RBNZ to step away from explicit tightening bias - ANZ
FXStreet (Bali) - Following the low NZ CPI print, falling by 0.2% in the last quarter of 2014, Mark Smith, Senior Economist at ANZ, notes that there is no need to move the OCR higher on the inflation outlook, expecting the RBNZ to remain on hold for a considerable period.
Key Quotes
"The soft inflation print of -0.2% q/q was weaker than market and RBNZ expectations. Seasonal falls in food and fuel prices provided major downward contributions but outside of the construction sector there were few signs of increasing capacity pressures filtering through to consumer prices."
"Lower fuel prices are likely to keep annual inflation low over 2015, but a more enduring shift looks to be underway in the evolution of inflationary pressure. In short, there is no need to move the OCR higher on the inflation outlook, and we expect the RBNZ to remain on hold for a considerable period."
"The news to us and the RBNZ is how benign core inflation readings have been despite the economy being well past the recovery stage. There is the growing likelihood there is a more persistent element to low inflation, which along with the stubbornly high NZD and fickle global scene should encourage the RBNZ to step away from the explicit tightening bias expressed in December."
Key Quotes
"The soft inflation print of -0.2% q/q was weaker than market and RBNZ expectations. Seasonal falls in food and fuel prices provided major downward contributions but outside of the construction sector there were few signs of increasing capacity pressures filtering through to consumer prices."
"Lower fuel prices are likely to keep annual inflation low over 2015, but a more enduring shift looks to be underway in the evolution of inflationary pressure. In short, there is no need to move the OCR higher on the inflation outlook, and we expect the RBNZ to remain on hold for a considerable period."
"The news to us and the RBNZ is how benign core inflation readings have been despite the economy being well past the recovery stage. There is the growing likelihood there is a more persistent element to low inflation, which along with the stubbornly high NZD and fickle global scene should encourage the RBNZ to step away from the explicit tightening bias expressed in December."