OCR increase pushed out

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.