New Zealand's Reserve Bank inflation forecasts rise over the year.

Data released by the Reserve Bank of New Zealand early Thursday morning showed a decline in inflation expectations in New Zealand for the first quarter of this year. The survey conducted by the Reserve Bank of New Zealand indicated that consumers expect the country's inflation rate to be around 2.06% over the next two years, down from the previous reading of approximately 2.12%.

On the other hand, the Reserve Bank of New Zealand's survey reported that one-year inflation expectations have risen to 2.15%, up from the previous quarter's reading of 2.05% for the last quarter of last year.

The Reserve Bank of New Zealand considers a two-year period to be the reasonable timeframe for the impact of changes in monetary policy on the economy, and therefore, the two-year figure is the one that policymakers pay the most attention to. However, this jump in one-year inflation expectations remains concerning.

It is worth noting that this indicator reflects expectations for the annual percentage change in the prices of goods and services anticipated by business managers over the next two years, and this indicator typically has a significant impact on the New Zealand dollar.

The Reserve Bank of New Zealand issues these forecasts through a periodic survey of 100 consumers, who are asked about their expectations for expected inflation levels over the next two years.

Investors pay attention to this indicator as workers often seek higher wages if their inflation expectations rise, and higher wages usually lead to increased demand, and thus, higher inflation.