We have just had the CPI data from New Zealand for Q4 2019

Later in this session we'll get a further data point for inflation, the much-watched measure from the Reserve Bank of New Zealand:

  • the Reserve Bank of New Zealand publish their own measure of inflation
  • can be a mover of the NZD.
  • The RBNZ's key measure of core inflation is 'the sectoral factor model', and its due at 3pm NZ time, which is 0300GMT.

The prior for this is 1.7% y/y (its been 1.7% for the past 4 quarters).

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The Sectoral Factor Model Inflation Gauge, in brief (summarised this from RBNZ info)

  • Core inflation excludes one-off or highly volatile price movements
  • Central banks use core inflation measures to assess what is happening to "underlying" inflation
  • The Reserve Bank of New Zealand has a set of models that produce core inflation estimates
  • The sectoral factor model estimates a measure of core inflation based on co-movements - the extent to which individual price series move together. It takes a sectoral approach , estimating core inflation based on two sets of prices: prices of tradable items, which are those either imported or exposed to international competition, and prices of non-tradable items, which are those produced domestically and not facing competition from imports