RBNZ: Still not convinced about reflation – HSBC
|The analysis team at HSBC explains that the RBNZ left its cash rate on hold at 1.75% as expected, and signalled it is essentially looking through all of the 0.7ppt upside surprise in the Q1 CPI inflation print, which was largely driven by temporary factors.
Key Quotes
“The central bank's projected cash rate track was unchanged from February, showing no rate increases until late 2019. It seems that the RBNZ, haunted by years of persistently undershooting its inflation target, will take some convincing that underlying price pressures have lifted sufficiently to warrant a higher cash rate.”
“Although we agree that headline inflation is likely to fall back a little over coming quarters, with underlying inflation expected to trend higher we think the RBNZ may have to consider lifting its cash rate sooner than they currently think. We see the RBNZ on hold this year and lifting its cash rate in Q1 2018.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.