Even at low levels of interest rates, monetary policy remains as effective as ever at providing timely economic stimulus, Reserve Bank of New Zealand Governor Adrian Orr said Wednesday.
For small open economies like New Zealand, the exchange rate plays a significant additional role in competitiveness, he noted.
Further, Orr said central banks have limitations in achieving goals with their tools and it cannot operate alone. Monetary policy needs to be partnered with broader fiscal and structural economic policy.
At the August meeting, RBNZ had cut the official cash rate by 50 basis points to 1.00 percent to underpin economic growth and revive inflation.
The recent rate cut by RBNZ reflected an expected decline in trading partner growth, lower NZ inflation expectations, and a global swing to lower interest rates. Lower interest rates stimulate investment, he observed.
The material has been provided by InstaForex Company - www.instaforex.com
source http://www.mt5.com/forex_news/quickview/2142105/
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