WELLINGTON, May 15 (Reuters) - New Zealand retail sales beat economists’ expectations as car sales surged, official data showed on Monday, though the strong result was unlikely to undermine the central bank’s determination to keep rates on hold for years.
Retail sales volumes rose a seasonally adjusted 1.5 percent in the three months to the end of March, data from Statistics New Zealand showed, well above analysts’ expectations of a 0.9 percent rise.
The result gave some optimism to investors who are cautiously waiting for Reserve Bank of New Zealand (RBNZ) Governor John McDermott to give a speech in the late afternoon local time (0500 GMT) on its economic forecasts.
The New Zealand dollar rose to $0.6870 from around $0.6853 before the indicator was published.
The central bank surprised markets at its policy meeting last week, adopting a more dovish tone than expected and warning that New Zealand’s strong economic indicators, particularly inflation, might not have as much momentum as economists and markets thought.
“The economy is looking quite normal verging on strong and in that sense it’s at odds with a cash rate which is really well below any levels of normality,” said BNZ economist Craig Ebert.
But that was unlikely to change the RBNZ’s mind about keeping rates at record lows of 1.75 percent, possibly until 2020.
“Their debate is really about where we’re going and what could happen, there’s an emphasis on uncertainty on things that might trip us up,” Ebert said.
Car sales fuelled the rise in retail sales, up 5.9 percent in the first quarter, with fuel, food and electronics also gaining.
“The demand for cars may reflect New Zealand’s growing population, with net migration remaining at record levels into 2017, and the relatively low cost of new vehicles,” Statistics New Zealand said in written note accompanying the release.
Retail sales were up 4.6 percent higher on the year, above the 4.4 percent rise predicted by analysts. (Reporting by Charlotte Greenfield; Editing by Eric Meijer)