The year-on-year increase in New Zealand's CPI in the third quarter was lower than economists' expectations, further indicating that the tightening actions of the New Zealand Federal Reserve have come to an end. According to data released on Tuesday, New Zealand's CPI rose 5.6% year-on-year in the third quarter, lower than economists' expectations of 5.9% and the previous 6%; The month on month increase was 1.8%, lower than economists' expectations of 2%, but higher than the previous value of 1.1%.
The New Zealand Federal Reserve maintained its official cash rate at 5.5% this month and stated that it may need to adopt restrictive policies for a sustained period of time in order to restore inflation to the target range of 1% -3% by the second half of 2024.
After the release of inflation data for the third quarter of New Zealand, investors have reduced their bets that the New Zealand Federal Reserve will raise interest rates again. Kirrod Kerr, Chief Economist of Kiwibank, said: "We are winning a battle against inflation. Today's data greatly reduces the likelihood of further rate hikes by the New Zealand Federal Reserve. Prior to the release of this year's data, regardless of the likelihood of rate hikes, it is now close to zero
The swap contract shows that the probability of the New Zealand Federal Reserve raising interest rates at its policy meeting on November 29th (the last policy meeting of the year) has decreased from nearly 50% before the data release to 26%.
Kelly Eckhold, Chief Economist of Westpac Bank New Zealand, said: "The likelihood of further rate hikes by the New Zealand Federal Reserve in November has decreased." He added that his expectations for rate hikes are currently being evaluated.
New Zealand's ANZ Bank has postponed its expected interest rate hike from November to February next year. The bank stated that domestic driven inflation pressure in New Zealand remains a major issue, but the pressure on the New Zealand Federal Reserve to take action this year has disappeared.
Economists say there is evidence that the aggressive tightening policies of the New Zealand Federal Reserve have played a role in suppressing price pressures. That's why inflation has slowed down amidst record breaking immigration and soaring domestic fuel prices.
Data shows that 9 out of the 11 main categories in New Zealand's consumer price index basket saw an increase in the third quarter, mainly driven by food, fuel, construction costs and rent, as well as a decrease in the prices of household items such as furniture and appliances. New Zealand's gasoline prices increased by 16.5% in the third quarter, reflecting the impact of global oil price increases and the recovery of consumption taxes.
In addition, core inflation indicators have also slowed down, with the core CPI in the third quarter excluding food, fuel, and energy rising by 5.2% year-on-year, lower than the previous 6.1%. The closely monitored indicator of domestic price pressure in New Zealand, the annual non trade inflation rate, has dropped from 6.6% to 6.3%, but it is still higher than the New Zealand Federal Reserve's forecast of 6.2%.