New Zealand Business Confidence fell the most since October 2008 according to a report from the National Bank of New Zealand (NBNZ). Details of the report revealed eroding expectations across most industries (with the exception of livestock), with the share of firms expecting profits to increase over the near term falling to the lowest in five months (18.8 percent). Interestingly, indexes tracking pricing intentions and inflation expectations saw the largest gains in at least half a year, hinting firms are looking toward a period of stagflation and hinting that the central bank may have its hands full in the months ahead as it tries to reconcile a rising price level with lackluster growth. As it stands, a Credit Suisse gauge of priced-in policy expectations shows traders are betting the RBNZ will add 131 basis points to benchmark borrowing costs over the next 12 months, the most in the G10.
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