UBS lowers New Zealand's Q2 inflation forecast but still expects a 25 basis point rate hike in July

(1) UBS economist Stephen Wu has lowered the forecast for New Zealand's Q2 quarter-on-quarter CPI growth from 1.7% to 1.6%, mainly reflecting the decline in fuel prices in May and the recent drop in global oil prices. (2) At the same time, the bank has also revised its forecast for the Q2 year-on-year CPI peak from 4.3% to 4.1%. (3) Nevertheless, UBS still expects the Reserve Bank of New Zealand to raise interest rates by 25 basis points in July, with fuel expected to contribute 90 basis points to the quarter-on-quarter data (previously 1 percentage point). Furthermore, it pointed out that after the US and Iran reached an agreement to reopen the Strait of Hormuz, there is downside risk to inflation.