New Zealand retail sales surge in Q4, but rates still on hold
Sales volumes, which strip out price movements, rose a seasonally adjusted 2.1 percent in the three months to Dec 31, well ahead of market expectations for a 1.1 percent rise. The bounce came after a revised 0.2 percent fall in the previous quarter.
The numbers followed an ANZ Bank survey on Thursday which showed consumer confidence at its highest level in 32 months.
Despite the recent upbeat data, the Reserve Bank of New Zealand is seen keeping its cash rate at a record low of 2.5 percent for a while yet.
"Overall, the message is that the New Zealand economy is starting to get traction from lower rates," said Ben Jarman, economist at JPMorgan.
"The new RBNZ governor is of the view that the economy is probably not as weak as it looks and that things can turn quite quickly when housing is very strong. That seems to be playing out," Jarman said, adding he expected a rate hike in the September quarter.
Market pricing implies no chance of a rate move at next month's review, and 25 basis points of rises over the next 12 months.
The New Zealand dollar rose to a 17-month high of $0.8519 from $0.8465 ahead of the data. Interest rate futures; eased with the December contract now implying a cash rate of
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