2 May 2016
NZD: Inflation is all-but dead - TDS
Research Team at TDS, notes that the NZ’s inflation is all-but dead (Q1 +0.4%/yr) while no-one is yet talking about the relevance of the RBNZ's 'calculated' core measure (Q1 unchanged at +1.6%/yr).
Key Quotes
“Dairy prices are barely off the floor, and with the NZD recently surging past $US0.70 a June cut to 2% is already baked in after the Bank passed on a cut this month. The question is: what is the appetite to cut beyond 2% with house sales and prices so strong?
NZD raced past $US0.70 recently via a reluctant Fed and dairy prices 'not falling', then briefly faded on talk of another "shock" cut by the RBNZ. The RBNZ didn't deliver and so combined with a reluctant Fed led us to upgrade our near-term 2016 NZD forecasts. Our AUDNZD year-end target remains at 1.16, as long as the NZD eventually depreciates towards $US0.63.”
Key Quotes
“Dairy prices are barely off the floor, and with the NZD recently surging past $US0.70 a June cut to 2% is already baked in after the Bank passed on a cut this month. The question is: what is the appetite to cut beyond 2% with house sales and prices so strong?
NZD raced past $US0.70 recently via a reluctant Fed and dairy prices 'not falling', then briefly faded on talk of another "shock" cut by the RBNZ. The RBNZ didn't deliver and so combined with a reluctant Fed led us to upgrade our near-term 2016 NZD forecasts. Our AUDNZD year-end target remains at 1.16, as long as the NZD eventually depreciates towards $US0.63.”