New Zealand central bank Governor Alan Bollard said an interest rate cut is a possibility were the nation’s currency to gain further, adding it isn’t something he’s currently considering.
“It’s not something we’re looking at at the minute, but it’s completely a possibility,” Bollard said in an interview on Television New Zealand’s Breakfast today.
Bollard yesterday kept the official cash rate at a record low 2.5 percent and signaled no change in borrowing costs for much of the year. He said the New Zealand dollar’s 12 percent gain the past 12 months is undermining economic growth, inhibiting exports and that sustained currency gains would reduce the need for further rate increases.
“It is worth us pointing out to the financial markets that betting on the New Zealand dollar’s strength is not a sure thing,” Bollard said today.
New Zealand’s dollar rose as high as 82.81 U.S. cents earlier today from 81.95 cents yesterday before Bollard’s rate announcement. It bought 82.47 cents at 9:35 a.m. in Wellington.