IMF says New Zealand's monetary policy stance fits inflation conditions
(Adds comments from IMF's chief of mission, details)
WELLINGTON, June 26 (Reuters) - The New Zealand central
bank's monetary policy stance fits the country's subdued
inflation conditions, the International Monetary Fund said in
its annual report on Wednesday.
"With downside risks to growth, employment, and inflation,
insufficient monetary accommodation still is a bigger concern
than upside risks to inflation if the monetary policy stance
turned out to be too expansionary," the IMF said in comments
following an annual visit to consult on New Zealand's economy.
New Zealand's inflation is currently below the midpoint of
the central bank's 2% target.
The Reserve Bank of New Zealand (RBNZ) is meeting on
Wednesday to set the benchmark interest rates. The bank cut
rates by 25 basis points to a record low of 1.50% at its last
meeting in May, reflecting a somewhat weaker inflation outlook.
Economists polled by Reuters expected RBNZ to hold interest
rates steady on Wednesday but keep the door open for further
The IMF said in the report that New Zealand’s economic
expansion was solid but had lost momentum recently.
Although the downside risks to the growth outlook have
increased, New Zealand has the policy space to respond should
such risks materialize, the report said.
The IMF also said it thought the New Zealand dollar was
"I think if you look at where the New Zealand dollar is,
it’s still above its long-term average, which is one possible
indication of strength. But we also say it’s moderately
overvalued, which is typically within the range of uncertainty,"
IMF's chief of mission for New Zealand said at a media briefing
(Reporting by Charlotte Greenfield and Praveen Menon; Editing
by Rosalba O'Brien and Peter Cooney)
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