RBNZ says tepid inflation expectations spark lower interest rates

Credit: REUTERS/CHARLOTTE GREENFIELD

The Reserve Bank of New Zealand governor said on Friday that low inflation was the main reason for lower interest rates both locally and internationally.

MELBOURNE, Aug 16 (Reuters) - The Reserve Bank of New Zealand governor said on Friday that low inflation was the main reason for lower interest rates both locally and internationally.

"Global and domestic low inflation expectations sit as a key reason for lower global and domestic official interest rates," Governor Adrian Orr said in a statement, responding to a commentary article.

The RBNZ cut rates by a surprise 50 basis points this month to a fresh record low of 1%, which surprised economists and led to a business commentary article questioning whether the cut was warranted given relatively strong local inflation and unemployment data.

(Reporting by Sonali Paul; Editing by Lisa Shumaker)

((Sonali.Paul@thomsonreuters.com; +61 3 9286 1419; Reuters Messaging: sonali.paul.thomsonreuters.com@reuters.net))

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