The opening of the Asian session today was graced by the publication of encouraging New Zealand inflation data that pushed the kiwi dollar higher at the start of the session.
Inflation for the year has reached an almost 10 -year high of 3.3% after the consumer price index jumped 1.3% in the second quarter. This reading is double that recorded in the first quarter of 1.5%.
The inflation figure released by Statistics New Zealand is also much higher than the market expected and this has led to speculation for a faster interest rate hike.
Kiwibank is now joining several other financial institutions that are forecasting a faster interest rate hike by the Reserve Bank of New Zealand (RBNZ).
Following the release of inflation data this morning, Finance Minister Grant Robertson said inflation was a ‘growth problem’, due to its unexpected expansion.
Still, Robertson said he would not tell the central bank how to do its job, or choose between his employment mandate and the inflation mandate.
This is because the bank is able to see both parts of this mandate and know how to manage it in a particular situation.
Meanwhile, ANZ Bank described the rise in inflation as 'horrible' and ASB Bank expects inflation to approach 4% by the end of this year, with high inflation risks to persist until next year.
The kiwi dollar had surged higher at the beginning of the Asian session, but its trading stagnated due to the strong US dollar causing it to remain traded around 0.70000.
