The Key Takeaways
"CPI rose 1.8% in 1Q22 q/q, an increase of 1.4% in 4Q21. Comparing to the same period last year, CPI rose 6.9% y/y. This is an acceleration of 5.9% y/y recorded in 4Q21. This is the biggest increase since the Jun 1990 quarter's 7.6% annual rise.
The Official Cash Rate (OCR), according to the latest inflation readings, should be raised further. This week, the Governor of Reserve Bank of New Zealand (RBNZ), Adrian Orr stated that more tighening was needed.
"We believe it is likely that the RBNZ would hike by 50bps at its May meeting. This will also include the release of a Money Policy Statement. The RBNZ could then pause at the 13 July meeting before moving on to Aug (after receiving more data, including the 2Q22 CPI data due 18 Jul).