1-year ahead inflation expectation 2.41%, prior 2.15%2-year ahead inflation expectation 2.3% (prior 2.1%)
New Zealand's economy is in need of further rate cuts but the RBNZ will not like inflation expectations edging higher.
I spoke about this data point earlier today and what it might mean for the kiwi $. ICYMI:
Over the past three quarters, the surveys indicate a general decline in both 1-year and 2-year ahead inflation expectations, suggesting that inflation is expected to move closer to the RBNZ's target band of 1–3%. The slight uptick in the 1-year expectation in Q1 2025 may reflect short-term factors, but the 2-year expectation continued its downward trend, indicating confidence in medium-term price stability. It's the two-year period that the RBNZ focuses on most in the survey.
1-year ahead inflation expectation: Increased to 2.15% from 2.05% in the previous quarter.
Q4 2024 (Survey conducted in October 2024)
2-year ahead inflation expectation: Increased to 2.12% from 2.03% in the previous quarter.
1-year ahead inflation expectation: Decreased to 2.40% from 2.73% in the previous quarter.
The RBNZ closely monitors these expectations to inform its monetary policy stance. The decline in medium-term expectations aligns with the central bank's goal of maintaining inflation within its target range, potentially allowing for more accommodative monetary policy if the trend continues.
An upside move for the two-year should support the NZD, at the margin.
This article was written by Eamonn Sheridan at www.forexlive.com. Read More Details
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