UBS: New Zealand's year-on-year CPI inflation rate is expected to peak at 4.1%

UBS believes that inflation data for the second quarter in New Zealand will not be as high as initially expected. However, the bank expects the Reserve Bank of New Zealand to raise the official cash rate by 25 basis points in July. Economist Stephen Wu has lowered his forecast for the second quarter CPI increase from 1.7% to 1.6%. This expectation reflects a decrease in fuel prices in May and the latest drop in global oil prices. The bank also predicts that the year-on-year CPI increase will peak at 4.1%, down from the previous forecast of 4.3%. UBS stated: "We still expect fuel to contribute significantly to the quarter-on-quarter data with about 90 basis points, and considering reports of an agreement between the U.S. and Iran to reopen the Strait of Hormuz, there is downside risk."