NZ: Searching for inflation - ANZ

New Zealand’s inflation expectations receded yesterday, which was unsurprising given the recent falls in petrol prices and headline inflation, according to analysts at ANZ.

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“The 2-year ahead inflation expectations measure fell to 2.09% from 2.17%. While one can pick plenty of holes in the survey, the RBNZ will probably be happy that expectations have held broadly stable around 2%. In the past, the RBNZ has shown concern when expectations fall towards 1.6%, although there is a risk that expectations fall further from here given that headline inflation looks set to fall towards 1% (if not below) over the coming 12 months.”

“The RBNZ will certainly want to see broader inflation pressures before it even considers shifting off its ultraneutral stance.”