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

 


NZ inflation, rate expectations edge higher: RBNZ survey

NZ inflation, interest rate expectations edge higher in RBNZ survey

By Paul McBeth

May. 22 (BusinessDesk) - New Zealand inflation is expected to edge,up over the coming year and lead to higher interest rates as the economy gathers momentum, according to the Reserve Bank's latest quarterly survey.

The consumers price index is seen rising to 2.08 percent over the coming year and 2.36 percent in the next two, up from 2.03 percent and 2.33 percent respectively, the survey of business managers, conducted by ACNeilson for the Reserve Bank, shows.

Inflation is running at an annual pace of 1.5 percent in the March quarter. The central bank kicked off a tightening cycle in March, hiking the official cash rate twice to 3 percent in a bid to cool the threat of building inflation.

A net 40 percent of the survey's respondents see current monetary conditions as being easy, down from a net 57 percent in the March quarter, and a net 21 percent see tighter than neutral conditions by the end of March next year.

The 90-day bank bill rate, often used as a benchmark to forecast the track of the OCR, is expected to be 3.5 percent by the end of June, rising to 4.1 percent by March next year.

"The latest RBNZ Survey of Expectations indicates businesses expect only a modest increase in inflation over the next couple of years," ASB economist Christina Leung said in a note. "While this will likely flow through to a lift in underlying inflation pressures, we expect this lift will be modest relative to the ramp-up in activity expected given the increased capacity of the NZ economy."

The survey shows economic growth is expected to be 3.3 percent in the year ahead, up from 3.2 percent in the previous quarter and 2.9 percent two years out. The Treasury raised its economic outlook, forecasting gross domestic product to grow 3 percent in the year ended March 31, 2014, before peaking at a decade-high 4 percent in 2015.

Business managers see faster earnings growth in the coming year, with hourly wages rising at a 2.9 percent pace in the year ahead and 3.1 percent in the two-year series. They had previously seen earnings growth of 2.6 percent and 2.9 percent in the one- and two-year horizons.

Unemployment expectations were largely unchanged, with respondents predicting the jobless rate will fall to 5.6 percent in the coming year, and 5.3 percent two years out, from the current 6 percent.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Wheeler Downplays Scope For ‘Large’ Rates Fall

Reserve Bank governor Graeme Wheeler says some market commentators are predicting further declines in interest rates that would only make sense for an economy in recession, although some easing is likely to be needed to maintain New Zealand’s economic growth. More>>

ALSO:

Ruataniwha Dam: Consent Conditions Could Mean Reduced Intensity

Legal advice sought by the Hawke’s Bay Regional Council on the Ruataniwha Dam consent conditions has confirmed that farmers who sign up to take water from the dam could be required to reduce the intensity of their farming operation to meet the catchment’s strict nitrogen limit. More>>

Health And Safety: Bill Now Sees Rules Relaxed For Small Businesses

Health and safety law reform sparked by the Pike River coalmine disaster has been reported back from the industrial relations select committee with weakened requirements on small businesses to appoint health and safety representatives and committees. More>>

ALSO:

Bearing Fruit: Annual Fruit Exports Hit $2 Billion For First Time

The value of fruit exported rose 20 percent (up $330 million) for the June 2015 year when compared with the year ended June 2014. Both higher prices and a greater quantity of exports (up 9.0 percent) contributed to the overall rise. More>>

ALSO:

Interest Rates: NZ Dollar Jumps After RBNZ Trims OCR

The New Zealand dollar jumped more than half a US cent after Reserve Bank governor Graeme Wheeler cut the official cash rate by a quarter-point and said the currency needs to be lower, while dropping a reference to criteria that justified intervention. More>>

ALSO:

Drones: New 'World-Class' Framework For UAVs

The rules, which come into effect on 1 August, recognise the changing environment and create a world-class framework that accommodates ongoing development while still ensuring the safety of the public, property and other airspace users. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news