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Reserve Bank of New Zealand sees need for more easing

Published 07/20/2016, 05:26 PM
Updated 07/20/2016, 05:29 PM
© Reuters.  RBNZ sees need for more easing

© Reuters. RBNZ sees need for more easing

Investing.com - The Reserve Bank of New Zealand on Thursday suggested the more easing is possible from an overnight cash rate of 2.25% with a weaker Kiwi an aim of policy and downside risks for global growth a worry.

The comments came in the latest economic assessment.

"Monetary policy will continue to be accommodative," the RBNZ said in the assessment. "At this stage it seems likely that further policy easing will be required to ensure that future average inflation settles near the middle of the target range. We will continue to watch closely the emerging economic data."

The RBNZ pointed out the trade-weighted exchange rate is 6% higher than assumed in the June statement and is also notably higher than in the alternative scenario presented in that statement.

"The high exchange rate is adding further pressure to the dairy and manufacturing sectors and, together with weak global inflation, is holding down
tradable goods inflation. This makes it difficult for the bank to meet its inflation objective."

"A decline in the exchange rate is needed," the RBNZ said.

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