Yesterday we had New Zealand inflation data:

BNZ comments (in brief) on the data and implications for the Reserve Bank of New Zealand policy path ahead:

  • NZ’s Q1 CPI showed a welcome downside surprise ... well below ... the RBNZ’s top-of-the-range estimate of 1.8%. Annual tradeables inflation of 6.4% was a full percentage point below the RBNZ’s estimate while non-tradeables inflation of 6.8% was 0.3 percentage points below.
  • The key messages were that inflation was probably past its peak, weaker than the RBNZ previously thought, but both headline and core measures still remaining too high for comfort and well above target.
  • near-term OIS pricing ... May meeting still pricing a very high probability of the OCR being raised by 25bps to 5.5% ... the data reinforced the likelihood of that being the peak for the cycle.
  • the natural focus turning to how long the OCR is likely to remain at its peak and how fast it falls when the easing cycle begins. On that score the market sees some chance of the easing cycle beginning late this year, but not really until next year before significant easing takes place
Reserve Bank of New Zealand orr

RBNZ Governor Orr

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