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15 Dec 2014
NZ inflation may fall below RBNZ’s target – Westpac
FXStreet (Barcelona) - The Westpac Institutional Bank Team forecasts NZ inflation to fall below the RBNZ’s 1-3% target band due to the falling oil and petrol prices.
Key Quotes
“Global oil prices have plunged to a five-year low. This may prove to be a large but temporary dip. Nevertheless, the sheer scale of the recent drop in oil prices, and accompanying decline in petrol prices, will have a profound effect on the economy.”
“We’re now forecasting inflation to fall below the RBNZ’s 1 to 3% target band for most of the next year. And although the RBNZ looks through sharp changes in the prices of volatile items such as petrol, the recent declines come on top of a more generalised softness in inflation in recent years.”
“As a result of this soft inflation environment, we’ve pushed out our expectations for rate hikes. We now expect the RBNZ will delay hiking the OCR for the whole of 2015 (previously, we anticipated a September OCR hike). We are now forecasting four OCR hikes over 2016, and one in 2017, taking the OCR to a stunted peak of just 4.75%.”
Key Quotes
“Global oil prices have plunged to a five-year low. This may prove to be a large but temporary dip. Nevertheless, the sheer scale of the recent drop in oil prices, and accompanying decline in petrol prices, will have a profound effect on the economy.”
“We’re now forecasting inflation to fall below the RBNZ’s 1 to 3% target band for most of the next year. And although the RBNZ looks through sharp changes in the prices of volatile items such as petrol, the recent declines come on top of a more generalised softness in inflation in recent years.”
“As a result of this soft inflation environment, we’ve pushed out our expectations for rate hikes. We now expect the RBNZ will delay hiking the OCR for the whole of 2015 (previously, we anticipated a September OCR hike). We are now forecasting four OCR hikes over 2016, and one in 2017, taking the OCR to a stunted peak of just 4.75%.”