New Zealand inflation accelerated faster than economists forecast in the third quarter, ending more than a year of subdued price pressure and underpinning the Reserve Bank’s case to start raising interest rates in 2014.
New Zealand’s central bank, which pioneered inflation targeting in the 1980s, said it could have cut borrowing costs more than it did in recent years had it more accurately predicted how low prices would stay.
New Zealand’s central bank will impose restrictions on low-deposit home lending from Oct. 1 to guard the financial system from a bubble that has made houses in the nation the fourth most overvalued in the world.
More New Zealand consumers expect higher house prices, adding to the case for a pick-up in the residential property market that may deter the central bank from cutting interest rates, according to ASB Bank Ltd.
New Zealand’s central bank said the pace of future interest-rate increases will depend on the booming housing market’s impact on prices and reiterated it will keep borrowing costs at a record low this year.
Dairy-production growth in New Zealand may slow or remain flat this year as the world’s largest exporter suffers from the worst drought in at least three decades, pushing prices higher, according to ASB Bank Ltd.