The focal points on the data agenda are the economic growth data from Japan for the January – March quarter and the Reserve Bank of New Zealand Survey of Expectations for inflation.
Japan preliminary Q1 GDP:
Most economists expect Japan’s economy shrank in the first quarter, primarily due to soft consumer spending at home and lacklustre overseas demand. GDP is forecast to contract by 0.1% quarter-on-quarter for January–March, after a 0.6% expansion at the end of 2024. While private consumption is set to rise, supported by steady household spending and a boost from inbound tourism, weak exports are likely to weigh heavily. There was only limited front-loading of shipments to avoid tariffs, unlike in other major exporting countries, and imports have picked up. This subdued growth outlook suggests the Bank of Japan may delay further interest rate hikes for now.
Reserve Bank of New Zealand Survey of Expectations:
The RBNZ conducts quarterly surveys to gauge inflation expectations among business leaders and professional forecasters.
Over the past three quarters, the surveys indicate a general decline in both 1-year and 2-year ahead inflation expectations, suggesting that inflation is expected to move closer to the RBNZ’s target band of 1–3%. The slight uptick in the 1-year expectation in Q1 2025 may reflect short-term factors, but the 2-year expectation continued its downward trend, indicating confidence in medium-term price stability. It’s the two-year period that the RBNZ focuses on most in the survey.
Q1 2025 (Survey conducted in January 2025)
Q4 2024 (Survey conducted in October 2024)
Q3 2024 (Survey conducted in July 2024)
The RBNZ closely monitors these expectations to inform its monetary policy stance. The decline in medium-term expectations aligns with the central bank’s goal of maintaining inflation within its target range, potentially allowing for more accommodative monetary policy if the trend continues.
An upside move for the two-year should support the NZD, at the margin.
- This snapshot from the ForexLive economic data calendar, access it here.
- The times in the left-most column are GMT.
- The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.
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