Reserve Bank of New Zealand Governor Adrian Orr said conditions that would allow the central bank to cut the official cash rate are becoming more apparent.
"Core inflation pressures are coming off and inflation expectations are coming back to target. We hope that we can see low and stable inflation on the horizon again and that would mean more normalized interest rates on the horizon again," Orr told state-owned Radio New Zealand on Thursday.
He added that interest rates around the world have likely peaked and the inflation tide has turned but more progress was needed for rate cuts.
The Reserve Bank of New Zealand (RBNZ) held the cash rate at 5.5% when it last met at the end of February but trimmed the forecast peak for rates and noted the risks to the inflation outlook have become more balanced.
Data last week showed New Zealand's economy is now in a technical recession, while inflation in the fourth quarter was sitting at 4.7%.
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