New Zealand Dollar Weaker as Waning Inflation Expectations Weigh

 
 
   By Rebecca Howard 
 

        WELLINGTON, New Zealand--The New Zealand dollar is weaker late Tuesday after a decline in inflation expectations added to the view that the central bank will keep interest rates on hold for an extended period.
        The Kiwi opened under pressure after a rebounding euro pushed everything back overnight, "but this afternoon the news has been the Reserve Bank's survey of inflation expectations," said Western Union Business Solutions corporate dealing manager Chris Hunter.
        Expectations for consumer-price gains for the next 12 months declined to 1.59% from 1.96% in the third quarter, the survey conducted for the central bank by The Nielsen Co. showed. Expectations for inflation in the next 24 months fell to 2.06% from 2.23%. The central bank is mandated with keeping inflation in a 1%-3% target band, with a focus on keeping it near the 2% midpoint.
        Mr. Hunter said easing of both the one-year and two-year estimates "reinforces that those interest rates are going to be on hold for a more extended period....The time line has been well and truly pushed out."
        ASB Economist Christina Leung said continued moderation in inflation expectations adds to other inflation indicators pointing to little urgency for the RBNZ to lift the cash rate. "We continue to expect the RBNZ will remain on hold until September 2015. The more benign inflation outlook means that we expect only two further OCR increases for an OCR peak of 4% in March 2016," she said.
        Write to Rebecca Howard at rebecca.howard@wsj.com
        (END) Dow Jones Newswires

        November 24, 2014 22:54 ET (03:54 GMT)

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