According to RBNZ’s latest Survey of Expectations, one-year inflation expectation fell by 38 basis points from 3.60% to 3.22%, marking its lowest point since September 2021. The survey also indicates a growing consensus, with more than half of respondents expecting that CPI inflation will fall back to RBNZ’s target range of 1-3% by the end of 2024
Furthermore, the survey pointed to a decrease in inflation expectations over the longer term, with two-year-ahead predictions dropping from 2.76% to 2.50%, and expectations for five and ten years ahead also seeing decline to 2.25% (from 2.43%) and 2.16% (from 2.28%), respectively.
In terms of interest rates, survey participants anticipate OCR to average at 5.46% by the end of March, with projected decrease to 4.74% by the end of the year. The OCR currently stands at 5.50%.
The publication of the survey’s results led to a discernible decline in the NZD, as market participants began to reevaluate the likelihood of another RBNZ rate hikes.
Technically, with 0.6172 resistance intact, recovery from 0.6037 is seen as a correction to the fall from 0.6368 only. Break of 0.6078 minor support will argue that this decline is ready to resume through 0.6037.
