NZ CPI: There's bite in that bark - TDS

Annette Beacher, chief Asia-Pacific macro strategist at TD Securities, points out that New Zealand’s December quarter CPI rose by +0.1%/q, a shade above TD/market expectations for a flat print and disappointed those looking for a small fall.

Key Quotes

“More importantly, the annual rate of 1.9%/y is barely discernable from the RBNZ's 2% forecast as published in the November Monetary Policy Statement (MPS) despite the slump in fuel prices in between.”

“Inflation is close to the mid-point of the RBNZ's 1-3% target range and the other half of the RBNZ's dual mandate - generating “maximum sustainable employment” - has also been achieved. This combination mitigates rising chatter of OCR cuts.”

“We remain of the view that the next move is up for the cash rate as the RBNZ's mandate has been achieved.”