Little evidence the RBNZ needs to aggressively raise rates

The consumer price index rose 0.3% in the three months ended June 30, slowing from a 0.4% pace in the first quarter, according to Statistics New Zealand. Economists had expected a 0.5% increase, based on the median in a Reuters survey, with forecasts ranging from 0.3% to 0.8%. Annual inflation was 1.8%, slipping from 2% in the 12 months through March 31.

The New Zealand dollar fell to 72.38 US cents after the data, from 72.69 cents immediately before the report was released.

Economists expect Reserve Bank Governor Alan Bollard will lift the official cash rate a quarter point to 3% this month though he has previously signaled the scope of the tightening cycle may not be as great as in previous periods of rate hikes.

Inflation is set to accelerate short-term on the back of costs of the Emissions Trading Scheme, higher goods and services tax and ACC charges.