there\u2019s a good chance that it prints a bit higher than that<\/a>, meaning you\u2019re outside of your target\u201d.<\/p>\n(The latest annual inflation figure is technically 3.04% for the September quarter).\u00a0<\/p>\n
\u201cSo we\u2019re kind of balancing up that risk against the risk of a more prolonged period of excess capacity in the economy which is a key driver of medium-term inflation pressures,” Conway said last Wednesday.<\/p>\n
ASB’s Tuffley says:\u00a0\u201cFor the RBNZ, what matters is its view on where inflation will settle next year. The high amount of spare capacity present now will keep pulling down inflation for those parts that are sensitive to market pressures.\u201d<\/p>\n
Non-tradeable inflation has a bit further to fall, Tuffley says, and competition is keeping a lid on margins. \u201cFood price inflation will also slow.\u201d<\/p>\n
A 25 basis-point cut to the OCR for November?<\/p>\n
ASB economists expect the RBNZ to cut the OCR by 25 basis points in November with Tuffley saying: \u201cAnything beyond that depends on the signs the economy shows that it is responding to the considerable fall in interest rates.\u201d<\/p>\n
The New Zealand Institute of Economic Research (NZIER) says although the latest annual inflation rate figure is at the top of the RBNZ\u2019s inflation target band, \u201cinflation looks broadly contained in the New Zealand economy\u201d.<\/p>\n
\u201cThe annual increase in some core inflation measures, such as CPI excluding food, energy and fuels, remains well within the inflation target band at 2.5%,\u201d NZIER says.<\/p>\n
While the NZIER did forecast a 25 basis point cut to the OCR in November, it says \u201cthe RBNZ faces a tricky balance between providing enough stimulus to support a recovery in the New Zealand economy over the coming year without reigniting inflation\u201d.<\/p>\n
ANZ senior economist Miles Workman says the latest annual inflation figure was mildly weaker than ANZ’s expectations of 3.1%.<\/p>\n
\u201cClearly the high frequency data and inflation expectations are a must-watch between now and the November Monetary Policy Statement (MPS), but today\u2019s data certainly don\u2019t present any challenge to the RBNZ\u2019s August forecast: underlying inflation is slowing largely as forecast.<\/p>\n
\u201cWe continue to expect a 25 bp (basis point) cut in November.\u201d<\/p>\n
Infometrics economist Matthew Allman says “today\u2019s data is unlikely to change the Reserve Bank\u2019s thinking ahead of the final Monetary Policy Statement for the year in November, as both tradable and non-tradable inflation were broadly in line with the Bank\u2019s forecasts”.<\/p>\n
“We expect the official cash rate to be cut to 2.25% next month, with limited scope for a further cut in early 2026 if the economy\u2019s recovery remains patchy.”<\/p>\n
Labour market data, which will be released on November 5, is “likely to show a further rise in unemployment, supporting the decision for a cut next month, although other high-frequency data could alter the bank\u2019s decision”, Allman says.<\/p>\n
Kiwibank senior economist Mary Jo Vergara and economist Sabrina Delgado say while inflation has climbed to the top of the band this September quarter – it stops there.\u00a0<\/p>\n
“The September quarter will likely mark the peak in inflation. The current December quarter is also typically the weakest quarter for inflation with seasonally weak food prices as well as the usual retail discounting that takes place,” Vergara and Delgado say.<\/p>\n
“With that in mind, we expect inflation to fall back below 3% from here. And the risks further out are still tilted to the downside as the economic undercurrents are weak.”<\/p>\n
They also expected a move to 2.25% in the cash rate next month.\u00a0<\/p>\n
Government welcomes inflation announcement<\/p>\n
Acting Minister of Finance Chris Bishop welcomed the latest annual inflation figure announcement.<\/p>\n
\u201cExpectations are that the rate will decline towards 2% in the first half of next year, easing pressure on households and businesses,\u201d Bishop says.<\/p>\n
\u201cHowever, continued discipline will be required by the Government to ensure inflation does not return to the 7.3% peak it reached under the previous Government in 2022.\u201d<\/p>\n
And he said the latest inflation news “highlights the importance of increasing electricity supply and competition, and the significant impact that local government rates have on New Zealanders\u2019 wallets”.<\/p>\n","protected":false},"excerpt":{"rendered":"Despite annual inflation reaching just over the top of the Reserve Bank\u2019s target range, no one seems particularly…\n","protected":false},"author":2,"featured_media":90008,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[42,43,40,38,41,39],"class_list":{"0":"post-90007","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-headlines","8":"tag-headlines","9":"tag-news","10":"tag-top-news","11":"tag-top-stories","12":"tag-topnews","13":"tag-topstories"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/90007","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=90007"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/90007\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/90008"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=90007"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=90007"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=90007"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}