RBNZ: Low inflation has been key puzzle in New Zealand economy

In a discussion paper on inflation published Thursday, the Reserve Bank of New Zealand (RBNZ) talks down the inflation expectations.

Key Points:

Inflation expectations have become more backward looking

The speed of adjustment in inflation expectations, proxied by the spread between short- and longer-term inflation expectations, can explain the unusually low inflation.

 Meanwhile, NZDUSD sits at fresh yearly highs just shy of 0.72 barrier, recording a +0.40% gain on the day.