vendredi 17 avril 2015
NZ Disinflation Progresses in Q1, Putting Rate Cut on the Cards
Posted on 10:37 by nice news
Wellington - New Zealand's inflation figures due Monday should show that price growth dissipated in the first quarter as cheaper fuel prices eroded what little inflation remained, no doubt raising speculation that the Reserve Bank's next move will be a cut.
The Reserve Bank of New Zealand (RBNZ) effectively ruled out rate hikes earlier this week when commenting on Auckland's overheated housing market, saying that inflation was too low to use monetary policy to tame the market.
Aside from the housing market though, there is little-to-no inflation in New Zealand. ASB economists expect the CPI to have declined 0.1% in the March quarter, easing the annual increase in the CPI from 0.8% in the December quarter to 0.3% last quarter.
This will mark the second-consecutive quarter than inflation has fallen below the RBNZ's 1-3% band.
While the main driver of the deceleration in inflation is certain to be petrol prices - which averaged $1.87 per litre in the March quarter compared with $2.09 in the December quarter - when excluding petrol prices inflation was still weak, economists say.
ASB chief economist Nick Tuffley says that without the decline in fuel prices, inflation would have been within the RBNZ's target band, but only just.
Westpac senior economist Michael Gordon said in a note on Tuesday that besides petrol prices, low wage growth and the still-high New Zealand dollar would have kept inflationary pressures subdued last quarter. Westpac predict that the CPI grew just 0.2% year-on-year last quarter, the weakest pace since 1999.
Low expectations
While the RBNZ has already signaled that the impact of lower petrol prices on inflation is only likely to be temporary, and they therefore want to avoid policy loosening, the big concern is that inflation expectations will continue to decline, affecting wage and price settings.
Morgan Stanley expect that weak inflation expectations, and
The Reserve Bank of New Zealand (RBNZ) effectively ruled out rate hikes earlier this week when commenting on Auckland's overheated housing market, saying that inflation was too low to use monetary policy to tame the market.
Aside from the housing market though, there is little-to-no inflation in New Zealand. ASB economists expect the CPI to have declined 0.1% in the March quarter, easing the annual increase in the CPI from 0.8% in the December quarter to 0.3% last quarter.
This will mark the second-consecutive quarter than inflation has fallen below the RBNZ's 1-3% band.
While the main driver of the deceleration in inflation is certain to be petrol prices - which averaged $1.87 per litre in the March quarter compared with $2.09 in the December quarter - when excluding petrol prices inflation was still weak, economists say.
ASB chief economist Nick Tuffley says that without the decline in fuel prices, inflation would have been within the RBNZ's target band, but only just.
Westpac senior economist Michael Gordon said in a note on Tuesday that besides petrol prices, low wage growth and the still-high New Zealand dollar would have kept inflationary pressures subdued last quarter. Westpac predict that the CPI grew just 0.2% year-on-year last quarter, the weakest pace since 1999.
Low expectations
While the RBNZ has already signaled that the impact of lower petrol prices on inflation is only likely to be temporary, and they therefore want to avoid policy loosening, the big concern is that inflation expectations will continue to decline, affecting wage and price settings.
Morgan Stanley expect that weak inflation expectations, and
NZ Disinflation Progresses in Q1, Putting Rate Cut on the Cards
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