RBNZ governor Wheeler to speak on outlook for New Zealand economy

Friday 24th July 2015

New Zealand Reserve Bank governor Graeme Wheeler will speak at a breakfast event at the Tauranga Chamber of Commerce next Wednesday about the outlook for the New Zealand economy, which will give him a chance to detail his thoughts after he cut the official cash rate yesterday.

The Chamber of Commerce, which had previously advertised the speaker as Reserve Bank assistant governor and head of economics John McDermott under Chatham House rules, will host Wheeler's briefing about the state of the New Zealand economy, according to Export New Zealand. The Reserve Bank said the event was private but it would publish the text of the speech on its website at 9am on Wednesday.

Wheeler yesterday cut the official cash rate by 25 basis points to 3 percent on the prospect of slowing growth and low inflation, and said more reductions were likely. The reduction was widely expected although some traders had bet he would lower the rate to 2.75 percent. Wheeler removed his reference to the New Zealand dollar being unjustifiably and unsustainably high – key criteria for the bank to intervene in foreign exchange markets – but said further depreciation in the kiwi was needed to support the country’s exporters.

The New Zealand dollar rose after his decision was announced as some traders said the tone was less aggressive than anticipated.

The kiwi was recently trading at 65.85 US cents from 65.65 cents ahead of the Reserve Bank’s decision yesterday, having touched a high of 66.95 cents overnight.

Currency analysts said Wheeler may use the speech to further clarify his view, given yesterday's statement was limited to one page. The bank may have been "unsettled" by the gain in the currency and may seek to emphasis that its upcoming September monetary policy statement includes a full set of forecasts that could prompt it to take more action to bolster the economy following a drop in dairy prices, they said.

BusinessDesk.co.nz

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