RBNZ Governor says monetary policy still effective at current settings

Credit: REUTERS/CHARLOTTE GREENFIELD

Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said on Wednesday monetary policy was still effective at its current accommodative settings but needed to be paired with broader fiscal and structural reforms to work.

WELLINGTON, Aug 28 (Reuters) - Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said on Wednesday monetary policy was still effective at its current accommodative settings but needed to be paired with broader fiscal and structural reforms to work.

RBNZ cut the official cash rate (OCR) by a steep 50 basis points 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.

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 conditions.

However, Orr expects a lower New Zealand dollar would promote export earnings.

(Reporting by Praveen Menon; Editing by Sam Holmes)

((praveen.menon@thomsonreuters.com; +6448028163; Reuters Messaging: praveen.menon.thomsonreuters.com@reuters.net; Twitter: https://twitter.com/pravemn))

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