The Reserve Bank says there is plenty of room for further interest rate cuts as the New Zealand economy weakens and current inflation pressure ease.
Last week, the bank cut the official Cash Rate for the first time in five years, to 8%, and said further reductions are on the cards.
Governor Alan Bollard told a business group in Auckland that inflation expectations appear to be holding steady at levels consistent with its 1%- 3% inflation target band.
However, Dr Bollard warned the bank will act if higher oil and food prices spill over and feed into higher prices and wage claims.
