You are here

New Zealand central bank says inflation expectations fall shows need for low rates

37642339 - 04_03_2016 - NEWZEALAND-ECONOMY_RATES.jpg
New Zealand's central bank on Monday said that inflation expectations are a key issue for monetary policy.

[WELLINGTON] New Zealand's central bank on Monday said that inflation expectations are a key issue for monetary policy.

RBNZ Assistant Governor John McDermott noted on Monday"inflation expectations have fallen significantly recently across a range of measures, and this is a concern for the Bank, contributing to the need for low interest rate settings."

Late last week the central bank surprised markets with a 25 basis point rate cut to 2.25 per cent and signaled more to come.

Mr McDermott said there has been a "material decline" in inflation expectations and they risk becoming embedded in future wage and price decisions.

"If the recent material decline in a broad range of inflation expectations measures continues, the Bank would need to reconsider the outlook for interest rates," he said.

REUTERS

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes