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Inflation in New Zealand has returned to the Reserve Bank of New Zealand’s target range of 1% to 3% in the third quarter, allowing for continued aggressive rate cuts. According to Statistics New Zealand, annual Inflation dropped to 2.2% in the third quarter, marking the first time it has been within the target range since March 2021. Kiwibank chief economist Jarrod Kerr stated that the Central bank‘s efforts in combating Inflation have been successful, with cost pressures easing and more interest rate cuts expected in the future.

The consumer price index rose 0.6% in the third quarter, slightly below economists’ expectations. Despite this, the New Zealand dollar saw minimal movement following the release of the data. The Central bank has already cut the official cash rate by 75 basis points since August, and further rate cuts are anticipated to stimulate the economy, which has been struggling due to high Interest rates.

ASB Bank senior economist Mark Smith predicts a 50 basis point rate cut at the Central bank‘s final meeting in November, but acknowledges that there may be a need for more aggressive policy easing. However, the Central bank continues to face challenges with non-tradeable Inflation, which decreased to 4.9% in the third quarter.

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