RBNZ Survey: NZ inflation expectations soften in Q1 2023, Kiwi drops

According to the latest monetary conditions survey, conducted by the Reserve Bank of New Zealand (RBNZ) showed on Tuesday, New Zealand's (NZ) inflation expectations are seen moderating across the time curve in the first quarter of 2023.

Two-year inflation expectations, seen as the time frame when RBNZ policy action will filter through to prices, eased further to 3.30% from 3.62% previous.

NZ Q1 2023 average one-year inflation expectations edged a tad higher to 5.11% vs. 5.08% seen in the fourth quarter of the last year. 

Kiwi hit by softer inflation data

The deceleration in NZ inflation expectations fuelled a fresh drop in the New Zealand Dollar (NZD), sending NZDUSD to session lows of 0.6335. The falling inflation expectations data dashes hopes of a hawkish RBNZ rate hike next month.