Consensus reached on slight falls in inflation

The survey is done quarterly and assesses informed opinion on the short, medium and long term economic outlook.

The latest survey reveals a mean position that inflation will be 5.11% a year from now, down from the current official total of 7.2%.

That 5.11% figure is marginally worse than the previous quarter's prediction of 5.08%.

But looking further ahead, a steeper fall is expected than previously.

The two-year outlook decreased by 32 basis points to 3.30%, down from 3.62% in December.

Furthermore, the spread of views narrowed, with no-one forecasting below 2.00% or above 6.00%.

Looking still further ahead, the mean five year inflation expectation was 2.36%, an 8 basis point decline from the previous quarter's value of 2.44%.

Mean ten-year inflation was put at 2.19%, close to the Reserve Bank's ideal.

Looking at the Official Cash Rate (OCR), respondents forecast a rise to 5% by the end of the year. That was a slight increase on the previous estimate but again, the spread of views narrowed.

The mean one-year-ahead GDP growth expectation fell by 48 basis points to 0.79%, and the two-year-ahead GDP growth fell by 20 basis points to 1.49%.

One-year-ahead wage growth was thought to be 5.51%, but that growth would fall in the subsequent year.

One-year-ahead unemployment expectations were 4.19%, higher than in the previous quarter and the mean two-year-ahead expectation also lifted to 4.60%.

House prices would fall in the first year but rise in the second.

The data for this report comes from a survey of 39 business leaders and professional forecasters, and is done by the Nielsen group for the Reserve Bank.

Commenting on the findings of the survey, Westpac's senior economist Satish Ranchhod said the results would “sooth the Reserve Bank's nerves.

“The key interest was in expectations for longer horizons, which tend to have a closer relationship with how businesses adjust their prices and wages, and signal if the inflation target is viewed as credible,” he wrote.

“On this front, the RBNZ will likely have breathed a sigh of relief.”