- Graeme Wheeler, Governor of Reserve Bank of New Zealand
Even though low borrowing costs are likely to inflame the housing market, Reserve Bank of New Zealand Governor Graeme Wheeler hinted that further interest rate cuts were on table even as recent fundamentals have been more positive. Yet, Wheeler underlined that the central bank needed to have "sufficient capacity to cut interest rates if the global economy slows significantly".
The comment on further easing being likely echoes Wheeler's wording in the monetary policy statement on September 10, where the central bank cut the official cash rate a quarter point to 2.7% for the third time in three months. The next review of interest rates is due on October 29, before the next full Monetary Policy Statement on December 10. The RBNZ predicted that growth in the 12 months to March will be the weakest in three years amid a slump in dairy prices and dwindling demand. New Zealand's economic growth has slowed this year to a little over 2% after prices plunged for dairy products, the nation's biggest export. Official data due on Friday is predicted to show inflation was just 0.2% in the third quarter, matching the expected annual rate, which is well below the 2% midpoint of the central bank's 1-3% band.
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