MNI BRIEF: Near-term NZ Inflation Expectations Ease

New Zealand’s near-term inflation expectations eased slightly in the third quarter while longer-term views ticked up, according to the Reserve Bank of New Zealand’s latest Survey of Expectations.

One-year-ahead inflation expectations fell to 2.37% from 2.41% and two-year-ahead expectations edged down to 2.28% from 2.29%. However, five-year-ahead inflation expectations rose to 2.26% from 2.18%, while the 10-year view held steady at 2.15%.

Respondents on average expect the Official Cash Rate to fall to 3.02% by the end of Q3 2025 and decline further to 2.86% by the end of Q2 2026, from the current 3.25%.

Expectations for the unemployment rate fell across all horizons, with the one-year view down to 5.02% from 5.19% and the two-year outlook dropping to 4.65% from 4.77%. One-year-ahead annual wage inflation expectations dipped to 2.61% from 2.72%, while the two-year outlook rose to 2.88% from 2.80%.

GDP growth is expected to be 1.66% in one year’s time, rising to 2.16% the following year. House price inflation expectations rose across the board. The one-year view increased to 2.87% from 2.78%, while the two-year expectation climbed to 3.86% from 3.52%.