RBNZ survey shows inflation expectations fall to 2.6% in the third quarter

The Reserve Bank of New Zealand released today its survey to show that the expectations for the nation's inflation rate in the upcoming two-years have dropped, where policy makers also hinted during the meeting a possibility of raising the interest rate in the upcoming period.

RBNZ issued today the 2-year inflation expectations index for the third quarter, reaching 2.6%, compared with a previous reading of 2.8% during the second quarter. 

On the other side, New Zealand consumer prices, which is the measure of the nation's inflation, rose 1.8% during the second quarter from a year earlier, while the central bank's strategy aims to keep annual inflation between 1% and 3%. 

Bollard mentioned that inflation rates are expected to stabilize between the secure area on the medium term, where the central bank of New Zealand announced the inflation rate during the  fiscal year of 2009 that ended in last March 31, reached 2.0% and expected to show accelerated growth during current year to be 2.8%. 

Respondents revised down their one-year-ahead expectations of GDP growth to 2.3%. This result is 0.4% points lower than in the last quarter. At the two-year horizon, respondents’ expectations are unchanged at 2.8%. 

Unemployment rate for the three months ended June 30, climbed more than anticipations, while the analysts indicated that unemployment rate may decline to  6.1 percent, signaling the RBNZ may increase the interest rate in upcoming period. 

New Zealand producer prices input, which are the prices that paid by farms, factories and other producers for commodities and services, rose for the third straight quarter as a global recovery demand for commodities rebounded. 

In addition, New Zealand retail sales advanced four times more than expected during the second quarter according to the report that released last week, which surged by 1.3%, from 0.2% in first quarter, supporting the vision for the central bank Governor Mr. Bollard, who indicated the New Zealand economy is surpassing the recession, and providing to keep raising interest rate.