er after taking its cash rate to 4.35%. In New Zealand, the focus is Tuesday’s inflation data, with headline consumer prices expected to re-accelerate to 4% in the second quarter from 3.1%, helped by higher fuel costs. But the detail that matters most is “non-tradeable” inflation – prices mostly set at home, like services – because it signals whether higher petrol prices are spilling into broader domestic costs.
Why should I care?
For markets: New Zealand’s non-tradeable inflation could swing the next RBNZ call.
Non-tradeable inflation is watched as a read on persistence: if domestically set prices keep rising quickly, the RBNZ has less room to relax. A hotter-than-expected print would typically push up forecasts for the central bank’s peak rate, lifting short-term New Zealand bond yields and supporting the kiwi through the interest-rate gap versus other countries. That could also ripple into currency pairs like AUD/NZD as traders reprice how far New Zealand rates go. A softer reading does the opposite: it can pull expected rate peaks down and leave the kiwi more exposed if oil stays high.