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New Zealand central bank governor says unlikely to need unconventional monetary policy tools

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Reserve Bank of New Zealand (RBNZ) governor Adrian Orr said on Thursday that it was unlikely the central bank would need to use unconventional monetary policy tools, although it was important to be prepared.

[WELLINGTON] Reserve Bank of New Zealand (RBNZ) governor Adrian Orr said on Thursday that it was unlikely the central bank would need to use unconventional monetary policy tools, although it was important to be prepared.

"Our current view is that we are unlikely to need 'unconventional' monetary policy tools. But we would be remiss not to be prepared," Mr Orr said in a speech in New Zealand that was released by the bank.

Mr Orr said global low interest rate environment is raising new challenges at central banks and many questions have been asked about the possibility of negative interest rates and alternative monetary policy strategies.

"We are currently thinking hard about these questions, because it makes sense to do so as a precaution – it's best to put the roof on when the sun is shining."

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He said many central banks are facing the challenge of inflation consistently running below target, prompting them to reduce policy rates to stimulate spending and boost demand.

REUTERS