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Inflation revision fails to dent expectations for New Zealand interest rate cut

Xinhua, November 7, 2016 Adjust font size:

New Zealand's consumer prices rose by more than reported by the government's statistics agency last month, but commentators are still expecting a central bank interest rate cut this week.

Statistics New Zealand on Monday corrected its consumers price index (CPI) figures for the quarter to the end of September, saying a processing error had resulted in a mistake in the figures published on Oct. 18.

"As a result, the quarterly CPI change in the September 2016 quarter is now 0.3 percent, having previously been published as 0.2 percent," said a statement from the agency.

"The annual change in CPI for the year to the September 2016 quarter moves to 0.4 percent from the previously published figure of 0.2 percent."

Statistics New Zealand had notified the Reserve Bank of New Zealand (RBNZ) of the changes ahead of its announcement of the official cash rate (OCR) on Thursday.

The RBNZ has an inflation target range of 1 percent to 3 percent over the medium term, but inflation has been tracking near zero for more than a year now and the OCR is at an historic low of 2 percent.

Analysts still expected the RBNZ to cut 25 basis points off the OCR on Thursday.

The ASB Bank said in a weekly economic outlook Monday that inflation remained "incredibly low" even with the CPI at 0.4 percent in the September year.

"While we expect the RBNZ to maintain a mild easing bias, we think that there is a high threshold for further cuts beyond 1.75 percent," said the ASB outlook.

While inflation was "on the cusp of picking up," the high New Zealand dollar and other factors in the global environment could keep inflation down, it said. Endit