16 Apr 2014
NZ inflation contained by high NZD - RBS
FXStreet (Bali) - After the lower-than-expected CPI reading in New Zealand earlier today, Greg Gibbs, FX Strategist at RBS, notes that inflation pressure was contained by the strong NZD.
Key Quotes
"New Zealand CPI inflation slowed from 1.6% to 1.5%y/y in Q1, weaker than the 1.7% expected. The data shows the hand of the strong NZD in dampening inflation and will help reduce pressure on the RBNZ to hike rates, although domestic inflation pressures are still firming. 2yr swap rates have dropped from 4.04% to 3.99% following the data, and may come off some more yet, weighing further on the NZD."
"Tradables inflation slowed from -0.3%y/y to -0.6%y/y, suggesting the strong NZD has dampened inflation. Non-tradables inflation rose from 2.9%y/y to 3.0%y/y, a high since Q3-2011, suggesting domestic inflation pressures are firming. The housing group inflation rose from 3.2%y/y to 3.3%y/y; indicative of firming pressure from rising housing prices. However, the 10% trimmed mean slowed from 1.6%y/y to 1.5%y/y (after its rise from Q3 of 1.4%). And the weighted median slowed from 2.0% to 1.7% (after its rise from Q3 of 1.8%)."
Key Quotes
"New Zealand CPI inflation slowed from 1.6% to 1.5%y/y in Q1, weaker than the 1.7% expected. The data shows the hand of the strong NZD in dampening inflation and will help reduce pressure on the RBNZ to hike rates, although domestic inflation pressures are still firming. 2yr swap rates have dropped from 4.04% to 3.99% following the data, and may come off some more yet, weighing further on the NZD."
"Tradables inflation slowed from -0.3%y/y to -0.6%y/y, suggesting the strong NZD has dampened inflation. Non-tradables inflation rose from 2.9%y/y to 3.0%y/y, a high since Q3-2011, suggesting domestic inflation pressures are firming. The housing group inflation rose from 3.2%y/y to 3.3%y/y; indicative of firming pressure from rising housing prices. However, the 10% trimmed mean slowed from 1.6%y/y to 1.5%y/y (after its rise from Q3 of 1.4%). And the weighted median slowed from 2.0% to 1.7% (after its rise from Q3 of 1.8%)."