NZ CPI: No trigger for near-term hike – TDS

Research Team at TDS notes that the New Zealand’s December quarter CPI rose by +0.4%/qtr, a fraction higher than expected by TD, the markets and the RBNZ but the jump in fuel and airfares drove an outsized +3.7%/qtr increase in Transport prices.

Key Quotes

“Due to the fall in Dec qtr 2015, annual inflation popped from 0.4%/yr to 1.3%/yr, the first time landing within the RBNZ 1-3% target band since mid-2014.”

“The RBNZ is well aware of spicy OIS pricing for a yearend rate hike (120%). We think the Bank won’t even shift to a hawkish stance until inflation expectations lift substantially from current levels. We certainly do not expect a hawkish stance for the 9 February OCR Review, and expect an unchanged CPI profile in the accompanying Monetary Policy Statement (MPS).”