New Zealand’s economy is trucking along nicely – and yet inflation continues to evade the reserve Bank’s target level,according to several new reports.

Despite continued weakness in dairy prices, the tourism and construction sectors are boosting economic growth to the point that HSBC has raised their GDP growth forcast from 2.4% to 2.6% in 2016.

Despite this, the Reserve Bank still faces a challenge in getting inflation up to it’s near 2% target. The subdued inflation outlook indicates further scope to cut the OCR to 2%, largely due to the resilient strength in the NZ dollar.