NZD: Inflation is All-but Dead - TDS

NZD: Inflation is All-but Dead - TDS

2 May 2016, 13:10
Roberto Jacobs

NZD: Inflation is All-but Dead - TDS

Research Team at TDS, notes that the NZ’s inflation is all-but dead (Q1 +0.4%/yr) while no-one is yet talking about the relevance of the RBNZ's 'calculated' core measure (Q1 unchanged at +1.6%/yr).

Key Quotes

“Dairy prices are barely off the floor, and with the NZD recently surging past $US0.70 a June cut to 2% is already baked in after the Bank passed on a cut this month. The question is: what is the appetite to cut beyond 2% with house sales and prices so strong?

NZD raced past $US0.70 recently via a reluctant Fed and dairy prices 'not falling', then briefly faded on talk of another "shock" cut by the RBNZ. The RBNZ didn't deliver and so combined with a reluctant Fed led us to upgrade our near-term 2016 NZD forecasts. Our AUD/NZD year-end target remains at 1.16, as long as the NZD eventually depreciates towards $US0.63.”


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