Aurelia Butler

WELLINGTON (Reuters) – New Zealand’s consumer inflation held near three-decade highs last quarter but came in below the central bank’s forecast, prompting some analysts to bet that cash rate increases over the coming months might be less aggressive than previously thought.Annual inflation ran at 7.2% in the fourth quarter unchanged from the third quarter and just below a three-decade high, Statistics New Zealand said in a statement on Wednesday.Inflation was slight above economists’ expectations in a Reuters poll for a 7.1% annual rise but was below the Reserve Bank of New Zealand’s forecast of 7.5% inflationOn a quarter-on-quarter basis, the consumer price index (CPI) rose 1.4%, following a 2.2% increase in the third quarter.“It is clear that overall inflation pressures are not as severe as the RBNZ feared,” analysts at ANZ Bank said in a note. “The RBNZ now has the luxury of responding in the usual fashion to weakening activity data, reining in its hawkishness to some degree.”Both ANZ and Kiwibank now expect the RBNZ to increase the cash rate by 50 basis points in February rather than a 75 basis point increase.At the central bank’s last meeting in November it increased interest rates by a record amount, forecast further aggressive hikes and warned the economy might have to spend an entire year in recession to bring sky-high inflation under control.The New Zealand dollar has eased back to $0.6480 from around $0.6505 earlier, while the two year swap rate is at 4.865% down from Tuesday’s close of 4.995%.WAR ON INFLATIONStatistics New Zealand data showed price increases were broad based with rising prices for house construction and household utilities, higher food costs and increases in flight costs all on an upward trajectory. Kiwibank economists said New Zealand is currently seeing peak inflation and the inflation, both offshore and onshore, is improving.“The downtrend in inflation is encouraging, but it remains unacceptably high. We see inflation slightly above the top end of the RBNZ’s 1-3% target band by the end of this year,” Kiwibank added. More

The Eurochambres’ report, based on the responses of trade and commerce organisations representing around 70% of world GDP, shows prolonged geopolitical tensions and instability as the top challenges for the global economy this year. Participants from the United States and the United Kingdom see rising inflation fuelled by soaring food and energy prices among the top challenges, while energy security is of particular concern in the European Union. Survey participants were asked about their expectations for real GDP growth in their country or region for 2023, which were compared to benchmark forecasts from the International Monetary Fund (IMF). U.S. and Chinese participants have similar real GDP growth estimates to those of the IMF, while the British Chambers of Commerce forecast a 1.3% contraction for the economy, much more pessimistic than the 0.3% growth predicted by the IMF. In the euro zone, the forecasts are largely in line with the IMF. However, there are significant differences between countries. The Spanish Chamber of Commerce and the Italian Union of Chambers of Commerce Unioncamere are optimistic for their countries’ growth compared to the IMF forecasts, while the German Chamber of Commerce and Industry DIHK predicts a greater slowdown for Germany’s growth than the IMF. However, the DIHK forecast of a 3.0% year-on-year GDP contraction in 2023 dates back to autumn and the economic environment has brightened considerably in the last months, with some economists now saying that the euro zone’s largest economy could avoid a recession. The 2023 Eurochambres global economic survey was conducted during November and December 2022. More