New Zealand Dollar Gains Despite Soft Inflation Data
The New Zealand dollar edged higher to $0.570, its strongest level in a month, even as inflation eased slightly more than expected in the third quarter. Annual inflation fell to 3.7% from 4.1% in the previous quarter, below market expectations of 3.8%. On a quarterly basis, the CPI rose 0.7%, compared with 1.5% in the second quarter and below the 0.8% estimate. Despite the slowdown, inflation remains above the Reserve Bank of New Zealand’s 1—3% target range, reinforcing expectations of another rate hike next week. The slowdown in price pressures is also expected to be temporary, with some economists anticipating inflation to pick up again in the fourth quarter as escalating tensions in the Middle East drive up energy prices. Markets are now almost fully pricing in another quarter-point rate hike at the central bank’s upcoming meeting.
The New Zealand dollar edged higher to $0.570, its strongest level in a month, even as inflation eased slightly more than expected in the third quarter. Annual inflation fell to 3.7% from 4.1% in the previous quarter, below market expectations of 3.8%. On a quarterly basis, the CPI rose 0.7%, compared with 1.5% in the second quarter and below the 0.8% estimate. Despite the slowdown, inflation remains above the Reserve Bank of New Zealand’s 1—3% target range, reinforcing expectations of another rate hike next week.
The slowdown in price pressures is also expected to be temporary, with some economists anticipating inflation to pick up again in the fourth quarter as escalating tensions in the Middle East drive up energy prices. Markets are now almost fully pricing in another quarter-point rate hike at the central bank’s upcoming meeting.