WELLINGTON (Reuters) - New Zealand's near-term inflation expectations fell in the fourth quarter, a survey showed on Tuesday, sending the currency lower and adding weight to the view that the central bank will cut rates this week.
The Reserve Bank of New Zealand's quarterly survey showed two-year inflation expectations - considered the timeframe through which policy action filters through to prices - eased to 1.80% from 1.86%.
The forecast for annual inflation averaged 1.66% over the coming year, down from 1.71% in the previous survey in August.
The survey results sent the New Zealand dollar <NZD=D4> skidding 0.5% to $0.6329, as it reinforced the bias for monetary policy to stay easier for longer.
The RBNZ is expected to cut the official cash rate (OCR) at its policy meeting on Wednesday.
The bank has struggled to support inflation around the 2% midpoint of its target band, with the number slipping to 1.5% in September.
The central bank stunned markets in August with a steep 50 basis points rate cut, to get ahead of a global easing trend and help meet the bank's inflation and employment targets.
"The dip in inflation expectations makes the RBNZ's job harder and highlights the risk that inflation will continue to fall short, supporting our call for an OCR cut tomorrow and further cuts next year," ANZ Senior Economist Miles Workman said in a note.
"The RBNZ have this survey data early, so will have incorporated it into their policy deliberations."
Gross domestic product data released in September showed annual growth slipped to 2.1% in the second quarter, the weakest pace since 2013.
(Reporting by Praveen Menon; editing by Shri Navaratnam and Sam Holmes)
