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New Zealand's inflation expectations surged in the latest Reserve Bank of New Zealand (RBNZ) survey, with one-year-ahead CPI forecasts rising to 3.41% from 2.59%, and two-year expectations climbing to 2.53% from 2.37%. This indicates persistent price pressures despite slowing economic growth, raising concerns about the RBNZ's ability to meet its 2% inflation target. The data suggests policymakers may need to adopt a more hawkish stance, potentially delaying rate cuts and maintaining tighter monetary conditions. For markets, the RBNZ's OCR outlook is critical for the NZD, as prolonged high inflation could weaken the currency against majors like the USD and AUD. Traders should monitor upcoming RBNZ statements and inflation data releases for clues on policy direction.
