New Zealand dollar steady as inflation miss leaves hawks unruffled

The New Zealand dollar was little changed at $0.5705 on Thursday after quarterly inflation came in below forecasts, Business Recorder reported. Consumer prices increased 0.7% in the third quarter, taking annual inflation to 3.7% from 4.1%, but softer fuel prices accounted for much of the slowdown and have since reversed.

Investors continued to expect a Reserve Bank of New Zealand rate increase on October 28, pricing in a full chance of a quarter-point move to 3.0%. Core inflation measures remained elevated, while markets also pointed to further increases next year, with the rate seen reaching at least 3.75%, above the central bank’s 3.2% projection. The Australian dollar also edged higher to $0.7035, with markets raising the implied probability of a November Reserve Bank of Australia hike to 64% after a warning about inflation risks.