RBNZ says monetary policy still effective
Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr says monetary policy is still effective at its current accommodative settings, but needs to be paired with broader fiscal and structural reforms to work.
RBNZ cut the official cash rate (OCR) by a steep 50 basis points to 1.0 per cent earlier this month.
"Our research gives us confidence that even at these low levels of interest rates, monetary policy remains as effective as ever at providing timely economic stimulus," Orr said on Wednesday.
Orr added the OCR cut reflected an expected decline in trading partner growth, weaker inflation expectations, lower interest rates internationally and a "funk" in global and domestic business confidence.
However, he expects a lower New Zealand dollar would promote export earnings.
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