NZ Easing Unlikely Just Yet

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CPI inflation edged higher again in the March quarter from 3.2% to 3.4%, continuing to hold above the RBNZ’s target band of 1-3%, reports Commonwealth Bank.

Despite slowing NZ growth, housing costs were again a major contributor, as were goods and services (not subject to foreign competition) which fell only marginally from 4.3% to 4.2% pa. Goods and services subject to foreign competition have begun to grow rapidly – from 1.7% to 2.1% – due to a collapsing NZ dollar and soaring oil prices, Commonwealth notes.

Put this together and there’s little room to move for the RBNZ, suggesting an interest rate easing, which has been widely expected, will likely not be seen until much later in 2006. In the mean time, growth continues to slow.

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