NZ: CPI under the RBNZ's radar just now - TDS

Annette Beacher, Chief Asia-Pacific Macro Strategist at TD Securities, notes that New Zealand’s June quarter CPI rose by +0.4%/q, matching TD's forecast and a pip below mkt at +0.5%.

Key Quotes

“More importantly, the annual rate of 1.5%/y matched that expected by the RBNZ as published in the May Monetary Policy Statement (MPS).”

“Inflation remains below the RBNZ’s 2% mid-point target, and has been for the last six years or so.”

“We remain of the view that the next move is up for the cash rate as capacity constraints combined with household-friendly fiscal stimulus (transfer payments and higher wages) point to a substantial pickup in inflation in due course.”

“We see inflation reaching 2% by end-2019, a year ahead of the RBNZ, hence stick with +25bp in May 2019 to 2%.”