MUFG Research discusses the RBNZ policy trajectory in light of this week's NZ CPI print.

"The latest CPI report revealed that the inflation slowed unexpectedly for the second consecutive quarter from 1.4%Q/Q in Q4 of last year to 1.2% in Q1 of this year. It was the slowest quarterly increase in headline inflation since Q1 2021. The annual rate of headline inflation also slowed to 6.7% in Q1 as it moved further below the peak from Q2 of last year at 7.3%. It will be a notable surprise for the RBNZ who had been expecting the annual rate of headline inflation to remain at around 7.3%," MUFG notes. 

"The report will give the RBNZ more confidence that inflation peaked at around the turn of the year which increases the likelihood that the RBNZ could pause their rate hike cycle at their next policy meeting on 24th May," MUFG adds.