Three out of three is definitely good for the Reserve Bank (RBNZ).
Results are out from the final of three quarterly surveys the RBNZ now has that look at future expected levels of inflation. And, like the results from the first two released in recent days, these latest results show that expectations of future inflation are moderating.
While such an outcome would not have been a deal maker or breaker for the expected cut by the RBNZ to the Official Cash Rate next week (taking it down to 2.25%), the survey results will give an extra level of comfort to the RBNZ Monetary Policy Committee when it makes its decision on Wednesday, November 26.
Last week we had the latest release from the 'experts' survey, the Survey of Expectations. Then on Monday of this week, we had the results from the Household Expectations Survey.
And then on Tuesday we got just the third official results from the more recently developed Tara-ā-Umanga Business Expectations Survey
The RBNZ might have been a bit nervous about these ones. Last time out this survey showed rising inflation expectations and results that set this survey somewhat apart from the other two.
And remember of course that since the previous quarterly round of surveys, actual inflation has risen to the top of the 1% to 3% target range.
The RBNZ has spent a lot of time developing this latest survey and clearly expects a lot from it in future as it has a large and broad sample size across a range of businesses and sectors.
In the event the results have come out very much as, if not better, than the RBNZ might have expected.
According to the RBNZ mean business expectations for annual CPI inflation declined across all time horizons. Mean one-year-ahead annual inflation expectations decreased from 2.53% to 2.42%. Mean two-year-ahead annual inflation expectations decreased from 2.64% to 2.39%. Mean five-year-ahead annual inflation expectations decreased from 3.16% to 2.81%. Mean 10-year-ahead annual inflation expectations decreased slightly from 3.57% to 3.56%.
The data for this quarter were obtained from 585 businesses by Research New Zealand – Rangahau Aotearoa on behalf of RBNZ. Field work for the September quarter survey was run between October 21 and 29, 2025 after release of the September quarter inflation figures.
The point of these, now three, surveys the RBNZ has, is not to get a precise reading of what inflation will be in the future - since that's never going to happen.
Rather, the point is for the RBNZ to gauge the mood on whether people see inflation increasing or decreasing. And these surveys are for the RBNZ to pick up signs of 'inflationary expectations' rising. If people expect future inflation, they will put prices up, thus increasing inflation. The vicious circle.
The upshot is that the RBNZ will have been greatly reassured by the outcomes of all three of the latest surveys.
2 Comments
2.25% isn't particularly low for the last couple of decades. It was 1.75% in 2016, 1% before Covid, and 0.25% after. I don't think we will get back to 0.25% without a global event, but perhaps 1% could happen.
https://www.rbnz.govt.nz/monetary-policy/monetary-policy-decisions
Surveys are cute, but at the next CPI update we'll almost certainly print over 3% for the year - It only needs 0.6% for the quarter to go above 3% for the year.
This suggests they've cut too far too soon, and failed to meet their single mandate.
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