By PNA / Xinhua and U.S. News Agency / Asian
New Zealand businesses need to find ways of operating within an environment of ongoing and recurrent economic and financial crises, the outgoing governor of the country’s central bank warned Monday.
Issuing his final Annual Report of the Reserve Bank of New Zealand, Alan Bollard said the RBNZ official cash rate had remained unchanged for a record 12 reviews, sitting at an historic low of 2.5 percent since March last year.
Such policy stability was in the face of a very unstable international economic situation and continuing gradual recovery in the earthquake-battered Canterbury region, he said in the report.
The slow recovery in the U.S., and particularly the simmering Eurozone crisis had cast a shadow over world growth following the global financial crisis, and New Zealand’s recovery had been ” slower than we would have liked,” with trading partners affected by Europe and bank funding enduring fragile periods.
“We are coming to terms with a very different world, one with lower price pressures, very low or even negative interest rates, slow growth and recurrent crises,” Bollard said in the report’s governor’s statement.
“New Zealand businesses need to find ways of operating within such an ongoing environment. The Reserve Bank needs to ensure its monetary and financial policies are robust in such a world.”
The other important area of uncertainty was the Canterbury earthquake rebuild, which had seen delays, including complex insurance issues, but it would eventually provide a significant and extended boost to nationwide activity.
On the positive side, commodity prices had softened, but remained reasonably strong, and New Zealand’s important markets in Asia had remained reasonably robust, while the country had just ended an excellent farm season, and banks had sufficient capital, funding and willingness to finance more economic activity with interest rates at historic lows.
The RBNZ had developed regular monitoring and measurement of financial imbalances in the economy, and four macro-prudential tools had been identified that it could consider using if future credit conditions were to warrant it.
Bollard leaves his post at the RBNZ, where he has served as governor for 10 years, on Tuesday, and will be replaced by Graeme Wheeler.
He will take up the position of executive director of the APEC (Asia-Pacific Economic Cooperation) Secretariat in Singapore in January next year.