16 Jul 2015
NZ Q2 CPI unveils more work to do for RBNZ - ANZ
FXStreet (Bali) - New Zealand Q2 CPI came soft, suggesting no immediate hurdle to a further OCR cut in July and continued easing thereafter, notes Mark Smith, Senior Economist at ANZ.
Key Quotes
"Although there were some modest upward surprises versus our expectation for tradable prices, non-tradable prices were soft outside of housing, suggesting no immediate hurdle to a further OCR cut in July and continued easing thereafter."
"The soft print for non-tradable inflation in particular – despite solid economic growth over the past year – provides further evidence that we are in a period of structurally low inflation."
"We expect the run of low inflation to continue despite the lower NZD, paving the way for the OCR to adjust to reflect the weaker growth outlook. We expect the RBNZ to fully unwind its 2014 hikes, with the OCR set to return to 2.5%."
Key Quotes
"Although there were some modest upward surprises versus our expectation for tradable prices, non-tradable prices were soft outside of housing, suggesting no immediate hurdle to a further OCR cut in July and continued easing thereafter."
"The soft print for non-tradable inflation in particular – despite solid economic growth over the past year – provides further evidence that we are in a period of structurally low inflation."
"We expect the run of low inflation to continue despite the lower NZD, paving the way for the OCR to adjust to reflect the weaker growth outlook. We expect the RBNZ to fully unwind its 2014 hikes, with the OCR set to return to 2.5%."