New Zealand’s inflation expectations have edged higher over both the 12-month and two-year horizons, according to the Reserve Bank of New Zealand’s (RBNZ) latest quarterly survey released on Friday.
The closely watched two-year inflation forecast, which aligns with the typical lag of monetary policy effects, rose to 2.29% for the second quarter of 2025. This marks an increase from 2.06% recorded in the first quarter, signaling that business managers anticipate higher price pressures in the medium term.
Shorter-term expectations also moved higher. Average one-year inflation expectations climbed to 2.41% in Q2, up from 2.15% in Q1, reinforcing the view that inflationary pressures are proving stickier than previously anticipated.
The New Zealand Dollar reacted positively to the data, with NZD/USD approaching the 0.5900 mark in Friday’s Asian session. At the time of reporting, the pair was up 0.35% on the day, supported by the stronger inflation outlook and shifting market sentiment around the Reserve Bank’s policy trajectory.
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