Westpac says the New Zealand dollar has pulled back after inflation data came in below expectations, but this decline is likely unsustainable, with consumer prices expected to accelerate again toward the end of the year.
Imre Speizer, a strategist based in Auckland, stated that although headline inflation slightly undershot forecasts, "the degree of surprise in this data is not sufficient to trigger a major move in the NZD, only a mild negative impact."
The slowdown in third-quarter inflation is likely just a temporary dip, and by year-end inflation will rise back above 4%, remaining above the Reserve Bank of New Zealand's current forecasts for most of next year.
The NZD/USD pair, "after an initial decline, may resume its upward trend, moving toward the 0.57 to 0.575 range."
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Westpac: NZD's Post-Inflation Decline Likely Temporary
Deep News07:20
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