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UPDATE 1-NZ central bank keeps rates on hold, softens language on NZD

Published 28/09/2017, 06:28 am
© Reuters.  UPDATE 1-NZ central bank keeps rates on hold, softens language on NZD
NZD/USD
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* Rates kept at 1.75 pct, as expected

* Lower NZD would "help", previously said it was "needed"

* Currency eases a little after decision (Adds background detail, updates market reaction)

WELLINGTON, Sept 28 (Reuters) - New Zealand's central bank held rates at a record low of 1.75 percent on Thursday as expected, saying that a lower New Zealand dollar would be helpful.

The Reserve Bank of New Zealand largely reinforced its neutral stance and said monetary policy would stay accommodative amidst a turbulent period just days after an inconclusive national election.

The bank softened its language around the currency after describing a fall as "needed" in its previous statement in August, noting that the exchange rate had eased since then.

"A lower New Zealand dollar would help to increase tradables inflation and deliver more balanced growth," said acting Governor Grant Spencer, in a statement.

The decision was Spencer's first as head of the bank after previous governor Graeme Wheeler stepped down this month at the end of his five-year term.

Spencer will serve as governor for six months on an acting basis while the bank searches for its new top official.

Seventeen economists polled by Reuters had expected the RBNZ to stand pat and all 19 who made forecasts beyond Thursday expect the bank to keep rates on hold until the end of the year. NZ/POLL

The country's election on Saturday gave no major party enough seats in parliament to govern alone, meaning it will now likely take weeks to form a government, with the impact on monetary policy still unclear. New Zealand dollar NZD=D4 eased to $0.7210 from around $0.7223 before the statement was released.

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