With the Q3 CPI due for release on Thursday we have taken the opportunity to have another look at our medium term inflation forecasts. And, perhaps, not surprisingly, we can’t find any inflation! New Zealand looks ripe for an inflation blow out but the global environment is, fortuitously, conspiring against this. Taking all things into consideration, we have thus lowered both our short and medium term inflation forecasts. As the Reserve Bank adjusts interest rates solely for the purpose of keeping inflation in check, this has also necessitated a moderation of our interest rate track. In short, rates will rise later, and slightly less in total than we have previously forecast.
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