NZ CPI: No trigger for May cut - TDS

Annette Beacher, chief Asia-Pacific macro strategist at TD Securities, note that the New Zealand’s March quarter CPI rose by +0.1%/q, a downside miss compared with RBNZ (+0.2%), consensus (+0.2%/+0.3%) and TD (+0.5%).

Key Quotes

“The 1.5% annual rate was a hair below the RBNZ February 1.6% forecast, despite higher-than-expected fuel and food prices in the interim.”

“The Bank's sectoral factor core measures were published several hours later - a phenomenon that needs to be addressed ASAP. Our five-core-measure average eased a little from 1.9% to 1.8%/y.”

“The miss was only by one decimal point for the RBNZ, domestic inflation surged to a five-year high of 2.8%/y, and tradable inflation is highly volatile.”

“Today's report(s) do not provide a trigger for easing as soon as next month. In a recent Reuters interview, the Governor hinted that a downside surprise was already baked into its March easing bias, where "... what you’re looking at is a long period of being surprised to the downside of CPI inflation so we’ve ... re-centered and thought about that". The RBNZ (and the new external MPC committee members) also need to see a more recent labour market update, released 1 May.”

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