Saturday, 14 December 2019

RBNZ 50 bp cut reduced chance of unconventional policy tools

Photo: RNZ / Alexander Robertson

WELLINGTON: The Reserve Bank of New Zealand’s (RBNZ) assistant governor Christian Hawkesby said in a speech released on Wednesday that the bank’s recent rate cut would likely avoid the use of unconventional monetary policy tools.

“A more decisive action now gave inflation the best chance to lift earlier, reducing the probability that unconventional tools would be needed in the response to any future adverse shock,” Hawkesby said in remarks delivered to a Bank of International Settlements forum in Manila.

The RBNZ slashed rates by 50 basis points to a record low of 1% this month, surprising markets at the size of the cut as the governor raised the possibility it may have to use negative interest rates in future.

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