Analysts at Westpac explained that the RBNZ remains very conscious of the softness in global inflation.
“Around the world, headline inflation has been boosted by the rebound in oil prices from unsustainable lows. However, ‘core’ measures of inflation have yet to show any substantial upturn.
So even though a lower New Zealand dollar will add to import prices to some extent, tradables inflation is projected to rise only gradually over the coming years. Putting all this together, the RBNZ is forecasting inflation to drop below 2% again by the end of this year and not to return to that mark on a sustained basis until mid-2019 – the same as in the February MPS.
In fact, the RBNZ’s statement noted that: “Developments since the February Monetary Policy Statement on balance are considered to be neutral for the stance of monetary policy.”