Analysts at Goldman Sachs note that they stick to their call of a 50 bps rate hike by the Reserve Bank of New Zealand next week, despite a modest easing in the Q3 inflation expectations.

Key quotes

“The RBNZ's survey of inflation expectations for Q322 showed a modest easing in expectations at both the 2-year (-20bp to 3.1%) and 5-year (-10bp to 2.3%) ahead horizons, although near-term expectations remain elevated in level terms.”

“Looking through the volatility, we note that medium- to long-run expectations remain well-anchored around the midpoint of the RBNZ's 1-3% target band, which should provide the RBNZ some relief given concerns around an unanchoring of inflation expectations given high spot inflation.”

We continue to expect the RBNZ to hike by 50bp to 3% at the August meeting."