NZ Inflation Expectations Ease Amid Cooler Economic Outlook
New Zealand's inflation expectations have cooled off significantly, according to the Reserve Bank of New Zealand's (RBNZ) September quarter survey. One-year-ahead consumer price inflation expectations dropped to 2.99% from 3.68% in the previous quarter.
The RBNZ surveys businesses and other organizations to gauge their forecasts for inflation, wages, and jobs. This quarter, those forecasts softened across the board: two-year-ahead inflation expectations fell to 2.55% from 2.87%, and even the 10-year number dropped to 2.51% from 2.94%. These lower expectations matter because they can become self-fulfilling: if firms and workers expect higher inflation, they're more likely to set higher prices and push for bigger pay rises.
The survey also showed slightly lower unemployment expectations (5.22% one year out, down from 5.5%), hinting that respondents see less labor-market weakening than before. However, wage expectations were mixed in the survey.