(Adds comment from economists, background)
WELLINGTON, Oct 25 (Reuters) - New Zealand's central bank said on Tuesday its monetary policy statements will now include projections for the official cash rate as opposed to the 90-day bank bill rate, guidance economists said will help make the policy outlook clearer.
It now views a projection of the official cash rate "as a more transparent way of presenting the expected policy actions needed to achieve its inflation target," the Reserve Bank of New Zealand said in a statement.
Up until now, the 90-day bank bill rate has been considered a proxy for the official cash rate as it "typically moves in a consistent manner with the official cash rate," the bank said. The monetary policy statement contained a quarterly forecast for the 90-day bank bill over a 4-year projection period.
However, the 90-day bank bill includes funding costs for banks as well as positioning and it can be impacted by credit and liquidity considerations.
Economists said an official cash rate projection is less ambiguous.
"They are just trying to reduce the possibility that their message gets confused," said BNZ Head of Research for New Zealand Stephen Toplis.
The central bank underscored that the change has no bearing on the way the bank conducts monetary policy.
"As with previous 90-day rate forecasts, projections for the official cash rate are conditional on the Bank's assessment of current economic conditions and assumptions about the future evolution of the New Zealand economy," it said.
The next monetary policy statement is due Nov. 10 and economists are widely expecting the central bank to cut the rate by 25 bps to a record low 1.75 as inflation remains well below the bank's 1 to 3 percent target range.
ANZ Senior Economist Philip Borkin said the move to use the official cash rate "removes a bit of ambiguity but doesn't change what the message is going to be."