Reserve Bank of New Zealand chief economist Conway spoke on a webinar hosted by an asset management firm on Wedneday.
Earlier headlines are here:
More now, info via Bloomberg (gated). Conway argues that appreciation of the New Zealand dollar would alter inflation dynamics:
- “If the Fed, for example, did start to cut toward the end of this year and we didn’t” then “that would show up first and foremost in the exchange rate,”
- “The exchange rate would start to appreciate, which would bring down inflationary pressures. So then you have to think about what are the flow-on effects of that inflation, and would that mean that we would end up cutting more quickly than what we are currently considering?”
Conway added that rate cuts are not in the hands of Bank because of Fed moves:
- “There’s a bit of wiggle room in there for us, I think in terms of charting our own course,” he said. “But I think it’s limited.”
This article was written by Eamonn Sheridan at www.forexlive.com. Source