NZ: 4Q CPI to set the RBNZ policy tone, high bar for any shift in sentiment - ING

New Zealand 4Q CPI data (early Asia Wed) will be the first major domestic data release of the year – and is likely to set the tone for RBNZ policy sentiment (at least in the short-run), according to Viraj Patel, Research Analyst at ING.

Key Quotes

“Market consensus is for headline inflation to remain at 1.9% YoY (0.4% QoQ) – which would still technically be below the 2% midpoint of the RBNZ's 1-3% target range. Even in the case of a positive CPI surprise, the general expectation is that the RBNZ will have some tolerance for inflation to head towards the higher-end of the target range. Still, the robust local macro story means that we like NZD on the crosses. AUD/NZD could be open to a fall towards 1.05-1.06 – with US steel tariff threats weighing on iron ore (& AUD).”