RPT-🇳🇿Cable FX Macro Weekly Note: N.Z. Q1 Inflation

**As seen in Risk In The Week report 04/14/23, subscribe at cablefxm.co.uk/reports

N.Z. 1Q CPI YoY, actual 6.7%, est. 6.9%, prior 7.2%

N.Z. 1Q CPI QoQ, actual 1.2%, est. 1.5%, prior 1.4%

N.Z. 1Q CPI Tradeable QoQ, actual 0.7%, prior 1.4%

N.Z. 1Q CPI Non Tradeable QoQ, actual 1.7%, prior 1.5%

Q4 consumer prices kept their pace unchanged at 7.2% Y/y, this was slightly higher than the median expectation of 7.1%. On a quarterly basis, prices eased to 1.4% from the prior 2.2%, the median survey had seen this metric at 1.3%. Non- tradables prices eased to 1.5% Q/q from the prior 2.0%, while tradable slowed to 1.4%, the lowest pace in a year. Housing and utilities gave signs of easing as the component decreased its pace to 1.3% vs the prior quarter. The report came to spark speculation of an early end to the RBNZ’s tightening cycle, however, the central bank surprised markets earlier in the month as it hiked the OCR by 50bps vs expectations of a 1/4 move. According to data compiled by Bloomberg, the median forecast sees N.Z. inflation slowing to 4.2% by end of year, some economists see prices within target as soon as Q1 of 2024. Nomura sits outside the consensus as they see higher inflation by end of this year, the desk pencils CPI to rise by 7.1% in 2023 vs the median of 5.2% Y/y. Economists at UBS noted the RBNZ removing some of their tightening bias in April as they now stand more data- dependent. However, UBS pointed to further yield inversion in the kiwi curve as the central bank sticked to its inflation rhetoric, they said expectations remain elevated and demand still exceeds supply. The desk at ING saw the 50bps April move as front-loading, they warned that even if another hike is seen in the calendar, the recent hike has increased the chances of rate cuts this year.