Financial experts say interest rate (OCR) cuts in New Zealand remain a while away due to persisting domestic inflationary pressure.
Milford Asset Management portfolio manager Mark Riggall said while it was good news annual inflation had fallen to 4 percent, "unfortunately, if we look at what's driving that, it's the wrong bit".
"It's the tradeable bits that are driving things down," he told AM on Thursday.
Speaking to host Melissa Chan-Green, Riggall said inflation in parts of the domestic economy is "remaining really sticky".
"Unfortunately, it's not really that economically sensitive," he said of domestic inflation. "It's things like auto insurance, it's your [property] rates - it's even things like real estate services going up. So, these are proving a bit stickier than we'd like - going in the right direction but not fast enough."
Riggall's remarks were backed up by ASB senior economist Kim Mundy.
"Domestic inflation is still... high, it's running over three times the rate of tradeable inflation - so we need to see that drop before the Reserve Bank's even going to think the OCR," she told Newshub on Wednesday.
The Reserve Bank's (RBNZ) next monetary policy committee decision was due on May 22.
"We really need inflation to get back down towards 1-3 percent for the RBNZ to be allowed to cut rates," Riggall told AM.
"It's getting to the point where the economy is quite weak... and so we do need these rates to come down at some point, sooner rather than later.
Money markets expected rate cuts sometime between September and December, according to Riggall.
However, he said some economists weren't expecting cuts until next year.
"But hopefully, we can see this inflation coming down faster and they can cut sooner."
The RBNZ has forecasted annual consumer price inflation would fall back within its 1-3 percent target range in September.
