Following the upbeat release of New Zealand’s fourth quarter (Q4) CPI data, analysts at Westpac anticipate the Reserve Bank of New Zealand (RBNZ) to emphasize more on their other mandate concerning employment for fresh impulse.
Consumer prices rose by 0.5% in the December quarter – a relatively large increase for this time of the year, which is typically weighed down by seasonal price declines. The annual inflation rate rose from 1.5% to 1.9%, returning to where it was at the end of 2018.
The result topped our forecast of a 0.4% rise, as well as the 0.2% increase that the Reserve Bank expected in its last Monetary Policy Statement.
In both cases, the upside surprise was on the tradables side of the CPI, which rose by 0.4% for the quarter (0.1% annual). Non-tradables prices were as expected with a 0.6% rise, with the annual pace dipping slightly to 3.1%.
Today’s result will be a modest positive surprise for the RBNZ and reinforces our expectation for no-OCR cut over the first half of 2020.
With inflation on track to be comfortably within the target range over the next year, the RBNZ’s other mandate – supporting maximum sustainable employment – is likely to be key to any future monetary policy moves.
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.