NZ: Dec qtr CPI is not the RBNZ game changer – TDS
|Analysts at TDS expect a modest +0.3%/qtr for Thursday’s Dec qtr CPI report from New Zealand and suggest that this outcome marginally lowers the annual inflation rate from 1.9% to 1.8%/yr, and their forecast is in line with the RBNZ’s November 2017 projection.
Key Quotes
“The market median is higher at +0.4%/qtr—and the tail is skewed towards +0.5%/qtr—so we are at the dovish end of the spectrum. However, a “soft” print does not detract from our view that at least two hikes are needed by the RBNZ later this year as capacity constraints combined with a substantial fiscal package point to a substantial pick up in inflation later this year.”
“The OIS strip is flat at 1.75%, through to 50/50 for a hike by August, but now is not the time to position for the forthcoming RBNZ tightening cycle as the Bank’s mandate and policy process remain unknown.”
“We look for AUDNZD to tactically test closer to 1.05 when the RBNZ (finally) switches to an outright tightening bias, but more likely to be a H2 event.”
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