PREVIEW-New Zealand Q2 inflation seen slowing, reinforcing RBNZ's neutral stance


* CPI seen rising 1.9 pct y/y in Q2, was 2.2 pct in Q1
    * Data due at 10.45 am Tuesday NZ time (2245 GMTJuly 17)

    By Ana Nicolaci da CostaWELLINGTON, July 17 (Reuters) - Inflation in New Zealand
likely slowed in the second quarter  after accelerating at the
start of the year, a cooling that would strengthen the central
bank's resolve to keep interest rates steady at record lows for
some time.
    Consumer prices likely rose only 0.2 percent in the second
quarter, according to a Reuters poll of 14 economists. In
January-March, prices increased 1.0 percent on a quarterly
    Annual inflation likely eased to 1.9 percent in April-June
from 2.2 percent in the first quarter, according to the poll, in
the middle of the central bank's 1-3 percent inflation target.
    Lower inflation should reinforce the central bank's view it
is too early to raise rates, particularly after it stuck to a
neutral stance when faced with a jump in the inflation rate in
early 2017.
    "Q1's strong inflation read was the result of a number of
one-off lifts, many of which have reversed again in Q2,"
economists at ASB bank said in a note.
    "Underlying inflation will remain subdued in Q2 and it is
likely to be some time before underlying inflation picks up to a
level consistent with the RBNZ raising interest rates."
    Elevated food prices would likely be offset by a fall in
fuel prices this past quarter, analysts said.
    The Reserve Bank of New Zealand has kept interest rates at
record lows even as the economy enjoyed some of the strongest
growth among advanced countries, as it tried to stoke stubbornly
low inflation.
    After inflation hit its highest level in five years in the
first quarter, some analysts expected the central bank to strike
a more hawkish tone at its May meeting.
    But the RBNZ stuck to its message that monetary policy would
remain accommodative for a "considerable period" and reiterated
that position in June. [nL4N1IC5PG][nL3N1JI566]
    The central bank's inflation forecasts for April-June are
slightly higher than those in the Reuters poll -- 0.3 percent
quarter-on-quarter and 2.1 percent on an annual basis.
    "The RBNZ has surprised the markets a few times this year by
remaining staunchly neutral in the face of rising hawkish
sentiment," TD Securities said in a note.
    The brokerage said it expects a "similar unchanged stance"
at the RBNZ's meeting on Aug. 10.

 (Polling by Tom Westbrook; Editing by Richard Borsuk)
 ((ana.dacosta@thomsonreuters.com; +64 27 352 8960; Reuters
Messaging: ana.nicolacidacosta.thomsonreuters.com@reuters.net))


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