RBNZ: inflation likely to decline in coming quarters - UOB

Analysts at UOB Group explained that the Reserve Bank of New Zealand as widely expected, kept its policy rate unchanged at 1.75% on the back of softer-thanexpected 2Q inflation outcome.

Key Quotes:

"The statement noted that the trade-weighted exchange rate has increased since the May statement, partly in response to a weaker US dollar, and that a lower New Zealand dollar is needed to increase tradables inflation and help deliver more balanced growth."

"Although the RBNZ noted that global growth has increased, more broad based, and domestic economic growth is expected to improve, it sees inflation likely to decline in coming quarters. It sees the OCR at 1.8% in Dec 2017 and Dec 2018, while it sees OCR edging just marginally to 1.9% in Dec 2019."