OCR increase pushed out
Wednesday, January 31st 2018, 9:17AM
New Zealand’s official cash rate is unlikely to move up until the end of next year, Westpac economists say.
Consumer prices rose just 0.1% in the December quarter.
Westpac said it expected inflation to remain below the Reserve Bank’s 2% target through this year.
“While there are signs that the period of very weak global inflation that we saw in recent years is dissipating, we’re certainly not in an environment where imported inflation is about to rocket higher. In addition, the continuation of strong competitive pressures in the retail sector means that the domestic prices of imported consumer goods are likely to remain soft for an extended period. The recent appreciation of the NZD since the start of this year also reinforces our expectation for softness in tradables prices through mid-2018,” the economists said.
“The chances of a significant rise in domestic inflation also look slim. Recently released GDP figures showed that the New Zealand economy had been growing at a solid pace in recent years, with growth topping out at 4% through 2016. But even with solid domestic activity and rising pressures in the construction sector, we did not see a material lift in non-tradables inflation.
“Now, growth has eased off, and recent business sector indicators point to a further softening in activity through the early part of 2018. Combine those conditions with changes in government charges (like reduced costs for tertiary education and doctors’ visits), and a strong rise in domestic inflation over the coming year looks like a longshot.”
| « Roboadvice on horizon | AMP changes outlook » |
Special Offers
Comments from our readers
No comments yet
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
