NZ: Expect a flat print for Q2 CPI - TDS

Analysts at TDS are expecting a flat print for NZ’s Q2 CPI next Tuesday, confirming that the Q1 +1%/qtr spike was due to transitory effects.

Key Quotes

“A flat print lowers the annual inflation rate from 2.2% to 1.7%/yr.”

“The RBNZ has surprised the markets a few times this year by remaining staunchly neutral in the face of rising hawkish sentiment. We expect a similar unchanged stance on 10 August at Wheeler’s last Monetary Policy Statement (MPS).”

“The OIS strip is underpriced for our February 2018 hike, but now is not the time to position for the forthcoming RBNZ tightening cycle. We look for AUDNZD to slide towards parity by year end.”