Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ firms trim inflation forecasts; jobless rate to stay high

NZ firms trim inflation forecasts, see jobless above 6 percent for 2 years: RBNZ survey

By Paul McBeth

Nov. 27 (BusinessDesk) - New Zealand financial institutions are picking a slower pace of price increases in the coming year and aren't betting on the unemployment rate dropping below 6 percent for two years, according to a Reserve Bank's survey.

Respondents in the central bank's survey of expectations sliced 20 basis points from their one-year median forecast for the consumer price index to 1.77 percent, below governor Graeme Wheeler's long-term aim under the policy target agreement, and the two-year ahead median expectation at 2.3 percent, down by the same amount.

Respondents are picking CPI to rise 0.3 percent and 0.5 percent in the December and March quarters, implying annual inflation of 1.5 percent and 1.4 percent respectively.

"Monetary conditions are currently perceived as being easy, and are expected to remain easy over the forecast horizon," the survey said.

The subdued inflation outlook comes after third-quarter CPI figures showed consumer prices rose at an annual pace of 0.8 percent, falling short of the central bank's target band of between 1 percent and 3 percent.

Last month, governor Wheeler said he was keeping close tabs on inflation in his debut monetary policy statement, and would monitor indicators such as pricing intentions and inflation expectations data closely over coming months.

Respondents were gloomier about the labour market in coming year, with one-year ahead expectations for unemployment rising to 6.8 percent from 6.3 percent in the September survey, and the two-year forward horizon increasing to 6.3 percent from 5.9 percent.

Earnings growth expectations were pared by 10 basis points to 2.4 percent and 2.7 percent for the one-year and two-year outlooks respectively.

Government figures showed the jobless rate unexpectedly rose to a 13-year high 7.3 percent in the September quarter with a flat labour market in Auckland and falling full-time payrolls. Economists have been sceptical of the latest reading, which has surprised them with three quarterly increases in the headline unemployment figure.

Firms trimmed 0.1 of a percentage point from their one-year forecast for annual gross domestic product growth to 2.1 percent and held two-year expectations at 2.3 percent.

The 90-day bank bill rate is expected to be 2.7 percent by the end of the year, rising to 2.8 percent by September 2013. The bill recently traded at 2.66 percent.

Firms predict the yield on the 10-year government bond will be 3.8 percent by September next year. The yield was recently at 3.54 percent.

The New Zealand dollar is expected to be 81 US cents by the end of March, falling to 80 cents by September, and is predicted to be 80 Australian cents by the end of September next year. The currency recently traded at 82.24 US cents and 78.44 Australian cents.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Auckland Transport Case: Men Guilty Of Corruption And Bribery Will Spend Time In Jail

Two men who were found guilty of corruption and bribery in a Serious Fraud Office (SFO) trial have been sentenced in the Auckland High Court today... The pair are guilty of corruption and bribery offences relating to more than $1 million of bribes which took place between 2005 and 2013 at Rodney District Council and Auckland Transport. More>>

ALSO:

Hager Raid: Westpac Wrong To Release Bank Records To Police

The Privacy Commissioner has censured Westpac Banking Corp for releasing without a court order more than 10 months of bank records belonging to the political activist and journalist Nicky Hager during a police investigation into leaked information published in Hager's 2014 pre-election book, 'Dirty Politics'. More>>

ALSO:

EARLIER:

Crown Accounts: Government Ekes Out Six-Month Surplus Of $9M

The New Zealand government eked out a tiny surplus in the first six months of the fiscal year as growth in domestic consumption lifted the goods and services tax take, while uncertainties over the Kaikoura earthquake costs meant expenses were less than expected. More>>

ALSO:

Almost 400 Jobs: Shock At Cadbury's Dunedin Factory Closure

Workers at Cadbury in Dunedin are reeling after learning this morning that the iconic Cadbury factory is to close, with the loss of almost 400 jobs... “The company had reported it was doing well and this has come out of the blue,” says Chas. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news