In RBNZ’s quarterly Survey of Expectations report, inflation expectation for one year ahead dropped from 1.71% to 1.66%. Expectations for two years ahead also dropped from 1.86% to 1.80%. Mean expectation for the end of quarter OCR dropped from 1.32% to 0.79%. One year expectations also dropped form 1.13 to 0.61%.
The release solidify the case for another RBNZ rate cut to 0.75% tomorrow. The key now is whether RBNZ would give any indication of easing bias, even after the cut. In particular, traders would look for phrase like “there is scope for further fiscal and monetary easing if necessary.”
