RBNZ survey of inflation expectations will likely rise again in Q2 - Westpac

The research team at Westpac suggests that with NZ’s inflation set to remain around 2% over the coming year, and a firm outlook for domestic activity, they expect that inflation expectations will likely rise again this quarter to levels around the RBNZ’s 2% target midpoint.

Key Quotes

“The closely watched 2-year ahead inflation expectations measure rebounded last quarter, rising from 1.68% to 1.92% - very close to the 2% mid-point of the RBNZ’s inflation target range and the highest level since 2014.”

“The latest expectations survey was held immediately after the Q1 CPI report, which saw annual inflation rising sharply to 2.2% - the first time it has been above 2% since 2011. While this was influenced by temporary factors, such as food and fuel price increases, it will no doubt have been a welcome surprise to the RBNZ.”