Credit Agricole CIB Research discusses the impact of this week's NZ inflation print on NZD.
"NZ’s inflation at 6.9% YoY in Q1 was at a 30Y high and above the RBNZ’s expected 6.6% YoY. The central bank’s own measure of core inflation, its factor sector model, showed further acceleration from 3.8% YoYin Q4 to 4.2% YoY in Q1. The data did not help the NZD for two reasons: (1) inflation surprised the to the downside relative to the consensus forecast of 7.1% YoY; and (2) the RBNZ had anticipated the acceleration in inflation and so raised its OCR by 50bp at its April meeting," CACIB notes.
"Importantly, it also emphasised that this move was a bringing forward of its anticipated rate hikes rather than a signal of a greater totality of rate hikes. So NZ’s inflation data simply means the RBNZ will stay on track to hike rates by another 75-100bp by year-end; it is not likely to lead to further acceleration in rate hikes by the RBNZ," CACIB adds.