Swaps price 75bps of tightening after RBNZ survey shows inflation expectations anchored at 2% midpoint despite mixed readings.
The Reserve Bank of New Zealand’s Q3 inflation expectations survey showed mixed but stable readings near the 2% target, reinforcing the case for further rate hikes. One-year-ahead inflation expectations fell 81bps to 2.60%, while five-year expectations rose 9bps to 2.31%.
Inflation remains above the RBNZ’s target, and domestic growth prospects have improved. With the policy rate near the lower end of the neutral range (2.20%-4.10%), markets are pricing 75bps of tightening over the next year, pushing the expected rate to 3.25%.
NZD/USD briefly dipped below its 200-day moving average at 0.5832 but recovered as the survey underscored the RBNZ’s credibility in managing inflation expectations.