By Lucy Craymer
WELLINGTON (Reuters) – In the third quarter, New Zealand’s inflation fell to 2.2%, back within the Reserve Bank’s target of 1% to 3%. This opens the door for further interest rate cuts.
Annual inflation had been at 3.3% in the previous quarter and peaked at 7.3% in June 2022. Kiwibank chief economist Jarrod Kerr noted that the bank can now claim progress against inflation, stating, “Cost pressures are easing, and more cuts are expected.”
The consumer price index increased by 0.6% from the previous quarter, slightly below economists’ expectations of 0.7%. The New Zealand dollar remained stable after the data release.
The central bank has reduced the official cash rate by 75 basis points since August as inflation aligns with its target. It may keep cutting rates in the following year to support an economy affected by high interest rates.
ASB Bank’s senior economist Mark Smith predicts a 50 basis point rate cut at the central bank’s last meeting of 2024 in November, though the possibility for earlier cuts remains.
The bank still faces challenges with non-tradeable inflation, which decreased to 4.9% in the last quarter from 5.4% previously.
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