The RBNZ's Survey of Expectations recorded a sharp drop in expected inflation in two years' time, from 1.85% to 1.63%, notes Westpac. Key Quotes "This is the lowest level of inflation expectations since 1994, when the inflation target range was 0% to 2%. This is certainly the lowest ever level of inflation expectations relative to the inflation target." "This drop in the RBNZ survey of inflation expectations follows similar falls in market-based measures of inflation expectations, and a smaller drop in the AON survey of inflation expectations in four years' time (which fell from 2.1% to 2.0%)." "We have been expecting inflation expectations to fall for some time, but the size of today's drop took us by surprise." For more information, read our latest forex news.