WELLINGTON, Oct 17 Reuters New Zealand39;s consumer inflation slowed to a twoyear low in the third quarter, reducing expectations that the central bank will hike the cash rate further in November and prompting a fall in the New Zealand dollar.

Consumer prices rose 5.6 yearonyear in the third quarter, slower than the 6.0 increase in the second quarter, Statistics New Zealand said in a statement on Tuesday. The data was slightly lower than economists39; expectations of a 5.9 annual rise in a Reuters poll.

While inflation remains well above the Reserve Bank of New Zealand39;s RBNZ target of 1 to 3, the reduced inflationary pressures has made an interest rate hike less likely at the central bank39;s policy meeting in November, according to the market and analysts.

Twoyear swap rates fell 5 basis points to 5.61 as the market pared the chance of a hike in November to 20 from 33 before the data. The New Zealand dollar slipped 0.4 to 0.5905 following the data.

Overall, the RBNZ will be comforted by this combination of results. That said, they are probably still nervous on the

stickiness of core inflation, Westpac economists said in a note.

We think the RBNZ will be happy to sit on their hands in November and see how the economy and inflation evolves through the summer period.

Inflation is a significant challenge for the RBNZ and it has responded by raising interest rates to 5.5 from a record low of 0.25 in October 2021.

The central bank has said rate increases are…