Research Team at HSBC, notes that the New Zealand's Q3 CPI was in line with expectations at 0.2% q-o-q and 0.2% y-o-y (market expected 0.1%, HSBC had 0.3%).
“Lower petrol prices and reduced vehicle registration fees were the major drags, as expected, while housing-related costs continued to rise. Most measures of underlying inflation lifted a little, but they generally remain near the bottom of the RBNZ's 1-3% target band. Although headline inflation is expected to rise over the coming quarters, the RBNZ remains worried that the prolonged period of low inflation will weigh further on inflation expectations, making the ‘near 2%’ medium-term inflation target more difficult to achieve on a sustained basis. We expect the RBNZ to cut its cash rate once more, at the next meeting in November. The Q4 inflation expectations print (due on 2 November) will be important for gauging the future path for the cash rate.”