The visible hand in economics

Inflation expectations beginning to moderate?

Posted on: November 26, 2008

So the survey of inflation expectations are out and … median two-year ahead inflation expectations have surrendered 0.3 percentage points to lie at 2.7%. This takes this measure back to its March 2008 level.

This is ok, however the big kicker for me is the average hourly earnings outlook, with expectations of hourly wage growth over the next year falling from 3.9% to 3.0% – the lowest level since June 2004! If this translates into an actual decline in wage growth then we know inflationary pressures are coming off the boil.

This will make the RBNZ feel a bit better about cutting. Caveats on any cutting behaviour may be discussed later in the day 😉

2 Responses to "Inflation expectations beginning to moderate?"

[…] a net 14% of firms expecting their own level of activity to contract!  In conjunction with the RBNZ inflation expectations number (specifically the surveys wage growth measure) this was one of the “green lights” for […]

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