New Zealand’s central bank said that changes to the nation’s potential growth rate, the neutral level of interest rates and other benchmarks may make policy settings more challenging.
“We are aware that familiar landmarks may have shifted,” Governor Alan Bollard wrote in the Reserve Bank of New Zealand’s statement of intent, published today on its website. The comments were dated May 22.
Indicators such as long-run unemployment levels and the sustainable level of the exchange rate have also changed, and the central bank needs to ensure that monetary and macro- prudential policies are calibrated accordingly, Bollard said. On June 14, Bollard lowered his economic growth outlook and signaled that the official cash rate may stay at a record-low 2.5 percent until 2013.
“The global economic and financial landscape has become more complex and is still vulnerable and unpredictable,” he said. Within New Zealand, the inflation outlook is currently subdued, domestic activity has been supported by strong farm incomes and housing activity has picked up, he said.
The government yesterday named Graeme Wheeler, a former World Bank managing director, as governor-designate to succeed Bollard from Sept. 26.
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