RBNZ vigilant on inflation figures – TDS

According to analysts at TD Securities, the RBNZ could hike rates later in the year if inflation expectations picks up pace.

Key Quotes

“Mar qtr CPI was much stronger than expected (+2.2%/yr) but one-offs linked to tobacco taxes, fruit prices and fuel means the RBNZ can wait for at least another CPI report before turning outright hawkish. If inflation expectations race towards 3% then perhaps the RBNZ considers lifting the OCR later this year, once the late-September election and RBNZ leadership handover goes smoothly, of course”.

“The RBNZ has managed to sound not-hawkish for some time, and next month we expect confirmation that the OCR could stay flat at 1.75% for 'up to two years'. AUDNZD bounced off the 1.0638 100dma but impetus to rally further is absent with the RBA determined to out-dove the RBNZ at the moment”.