New Zealand Consumer Prices (Q2)

The weak tone of the CPI inflation data for the second quarter probably means that at Thursday’s unusual inter-meeting economic update the RBNZ will hint that it intends to use tighter lending restrictions to control the housing market and further interest rate cuts to boost inflation. We believe the Bank will cut rates from 2.25% to 2.00% in August, and perhaps to 1.75% by the end of the year.

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