Some good and bad news on the inflation war
Inflation went the RBNZ’s way last week, but the war on high and sticky inflation is far from won, Sharon Zollner, ANZ’s chief economist says.
“There is plenty in the first quarter (Q1) CPI data for both the doves and the hawks to focus on, and while these data do tell a better relative story than the February monetary policy statement (MPS), it’s still a pretty bad picture in an absolute sense,” Zollner says.
Inflation is still running near a multi-decade high, and annual non-tradables inflation, alongside a few other measures of typically-sticky inflation, were still accelerating as at Q1, she says.
“While it is important for the RBNZ to appropriately account for the lags with which monetary policy typically works, we think it’s a bit of a stretch to think the data will give it good reason to blink before taking the OCR to 5.5%.”
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