Inflation expectations push lower in RBNZ survey
By Rebecca Howard
Aug. 6 (BusinessDesk) - Business managers and finance professionals lowered their inflation expectations in the latest Reserve Bank survey.
Respondents to the central bank's quarterly survey predict consumer price inflation of 1.71 percent a year from now versus 1.97 percent in the prior quarter. Two-year expectations were for inflation of 1.86 percent versus 2.01 percent in the prior survey.
A net 78.7 percent of respondents believe current monetary conditions are easier than neutral. That is up from a net 64.7 percent in the previous quarter’s survey. "Easier than neutral" indicates rates which are low enough to stoke growth.
A net 80.9 percent of respondents believe monetary conditions in one year’s time will be easier than neutral.
The survey comes just ahead of the Reserve Bank of New Zealand's monetary policy statement and rate decision tomorrow afternoon. The central bank is widely expected to cut its official cash rate by 25 basis points to 1.25 percent in a bid to stoke inflation, protect the economy from a global economic slowdown and to prevent the New Zealand dollar from rising too much.
The survey's respondents trimmed their outlook for economic growth. They now expect annual GDP growth of 2.10 percent one year ahead, down from 2.19 percent in the prior survey. Two years ahead, they see it lifting at an annual rate of 2.15 percent versus 2.17 percent in the prior survey.
The unemployment rate is seen at 4.31 percent in one year and 4.34 percent in two years. The latest Stats NZ data released earlier today had unemployment at 3.9 percent in the June quarter.
One-year ahead expectations for annual growth in wages fell to 2.75 percent from 2.89 while two year ahead expectations fell to 2.68 percent from 2.93 percent in the latest survey.
The September 2019 quarter survey was conducted from July 17 to July 22.