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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news