Data is here: New Zealand Q2 CPI +0.3% q/q (vs. +0.4% expected and +0.3% prior)
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Westpac’s response:
- Details of the inflation report were weaker than the headline
- Little sign that housing-related inflation is accelerating
- Non-tradable inflation comes in weaker than expected
They question if the RBNZ is going to hike on July 24:
- “after today’s data double-whammy, we think markets should pause for thought – a July OCR hike may not be quite such a sure thing as previously thought. We will spend the remainder of today assessing how the RBNZ might react to today’s news”
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From ANZ:
- The softer than expected 0.4% q/q rise in non-tradable prices is the major area of downward inflation surprise
- Few signs of domestic inflationary pressure outside of housing
- Although there are limited signs of increasing capacity pressures flowing through to the retail price level, what pressures there are, combined with the elevated level of the NZD still warrants some further removal of interest rate stimulus
- ANZ says that the odds favor of an OCR hike on July 24
- But they asses the probability of a hike at “way below the circa 90% odds priced into the market” (I referred to this, here)
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Other responses, in summary: ASB, TD Securities, RBC Capital have all (separately) issued client notes saying they are still of the view that the RBNZ will hike 25bps next week, then pause for the rest of the year or at least until December.
