WELLINGTON, July 26 (Reuters) - Reserve Bank of New Zealand Assistant Governor John McDermott said on Wednesday that a weaker currency would help rebalance economic growth, in a speech on the trends the bank looks at when setting monetary policy.
McDermott said the neutral interest rate, potential output growth and the equilibrium exchange rate were particularly important "to pin down so that monetary policy can be set appropriately."
"From a growth point of view, a lower real exchange rate would help rebalance growth towards the tradables sector, especially as not all traded industries are benefiting from the current high terms of trade," he said.
The New Zealand dollar
last week hit its highest level since September 2016 and is currently not far from those levels. The currency shot up after the central bank's monetary policy statement in June, as some in the market had expected the RBNZ to do more to talk down the resurgent kiwi.
McDermott also said inflation appeared to be subdued. New Zealand inflation slowed more than expected in the second quarter, according to recent data.
"While inflation pressures have lifted from the lows seen in early 2015, they still appear to be relatively moderate," he said in the speech.
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WELLINGTON, July 26 (Reuters) - Reserve Bank of New Zealand...
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