NZ Inflation Moves Up, Will RBNZ Increase Interest Rates Now?

New Zealand’s Consumer Price Index (CPI) has moved up by 0.8% in Q1, much above the forecast of 0.7%. The annual inflation was also above expectations at 1.5% as compared to 1.4% the previous year.

While this is being seen as a good sign, economists are still skeptical about it being enough for the Central Bank to consider raising the interest rates.

Even though the CPI rose by 0.8 percent and the annual inflation is showing a 1.5% rise, it is still below the Reserve Bank of New Zealand’s (RBNZ) mid-point target of 2%.

Economists are no doubt speculating whether the RBNZ would lift the official cash rate (OCR) or not. Even though the RBNZ had made its policy stance clear in the previous Monetary Statement, some are still hoping that the bank would raise the OCR in the next monetary review in view of better CPI numbers. They feel that the government’s monetary support should end as the economy is well on the path of recovery in NZ.

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