After the release of the RBNZ's.........>

NEW ZEALAND: After the release of the RBNZ's inflation expectations survey

Westpac noted that "there has been a number of relevant developments since the

last survey. Namely, CPI inflation fell to 1.1% in the March quarter, and new

RBNZ Governor Adrian Orr signed a new PTA with the Minister of Finance. This

broadened the focus of the RBNZ, by introducing a dual mandate. The RBNZ is now

required to both keep inflation between 1-3% and maximise sustainable

employment. The latter change may have been one factor nudging longer term

inflation expectations (a relatively new addition to the RBNZ survey) higher in

today's survey. Ten year ahead inflation expectations rose from 2.05% to 2.18%,

which will be concerning for the RBNZ. The risk is that respondents may have

interpreted the change in the PTA as meaning the RBNZ may be inclined to run

monetary policy a little looser, allowing a bit more inflation in an attempt to

boost employment. A view the new Governor was keen to dismiss in his first press

conference."