The NZD is 0.3% weaker against the USD this morning,sitting at 0.8630.Yesterday, the main event was the Q1 2014 CPI reading,which revealed an inflation rate of 1.5% y/y, lower thanthe market and the RBNZ, which were both expecting1.7%. The miss was entirely driven by tradeable inflation –clearly the high NZD had a stronger impact on prices thanthe RBNZ expected. The implications are twofold: (1) theRBNZ has a lower starting point for inflation, and (2) theywill be more wary about how an even stronger NZD willaffect their inflation track going forward.
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