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WELLINGTON, April 7 (Reuters) - New Zealand's strong labour supply, spurred by booming immigration, is a factor in the Pacific nation's accommodative monetary policy, the central bank's deputy governor said on Thursday.
"Stronger than expected labour supply, and greater than expected slack, has been a factor in our assessment that it has been appropriate to keep monetary policy accommodative," said Geoff Bascand at a speech in Dunedin.
"Unexpectedly strong growth in labour supply, along with the characteristics of the migration cycle, substantially explains why wage and non-tradables inflation pressures have been weaker than expected," he added.
The New Zealand economy had been expanding steadily in the last five years, with 180,000 jobs added to the economy and only a modest decline in unemployment, according to the RBNZ.
The population had grown by a quarter of a million people in the last four years, with half of that due to migration.
In addition to lower wage inflation the high New Zealand dollar has been threatening the central bank's inflation target of between 1 and 3 percent. Annual inflation is currently 0.1 percent.
That may force the RBNZ to ease policy at its April 28 meeting, after it surprised financial markets last month by cutting the cash rate a quarter percentage point to 2.25 percent.
The influx into the workforce is unlikely to slow down, with New Zealand posting strong migration in the past year, with a record net gain of 67,400 migrants in the 12 months ending in February.
