WELLINGTON: New Zealand says inflation in the fourth quarter was at an annual rate of 2.2%, comfortably within the central bank’s target range of 1% to 3% for the second consecutive quarter, leaving the door open for further rate cuts.
Inflation rose 0.5% in the fourth quarter from the prior quarter, in line with analysts’ forecasts, according to data released by Statistics New Zealand yesterday. This compares with a 0.6% rise in the previous quarter.
The annual rate was slightly higher than a forecast from both economists and the central bank of 2.1% at a time when the country’s economy has been weak.
“The Reserve Bank of New Zealand won’t welcome slightly higher than forecast headline inflation, but a small downside miss on non-tradable inflation should trump the small upside miss on the tradable side, meaning a 50-basis-point cut in February remains appropriate,” ANZ economists said in a note.
The New Zealand dollar yesterday was little changed following the release of the data. The New Zealand dollar was at US$0.5663.
New Zealand’s central bank has cut the official cash rate by 125 basis points since August as inflation eased but economic activity also contracted, pushing the country into recession in the third quarter. — Reuters
