New Zealand Inflation Expectations Rise

The Reserve Bank of New Zealand on Tuesday said inflation expectations have risen in the second quarter.

A survey conducted shows businesses expect consumer price to gain slightly to 1.64 percent from 1.63 percent in the next two years, which is the duration require for central bank rate increase to filter through to prices.

Expectations for consumer-price gains for the next 12 months increased to 1.22 percent from 1.09 percent recorded in the first quarter of the year.

The central bank is required to keep inflation within a 1% to 3% target range, while aiming for near 2%. As a result, the survey is closely watched for any clues on where inflation might head over the near and medium term. New Zealand’s annual inflation hit 0.4% in the March quarter.

The Reserve Bank of New Zealand kept the official cash rate unchanged at 2.25% in April, but said further policy easing may be required to ensure that future average inflation settles near the middle of the target range.

New Zealand dollar rose from 67.77 U.S. cents to 68.39 cents after the survey was released.