Investing.com - The Reserve Bank of New Zealand cut the official cash rate 25 basis points to 1.75% on Thursday as widely expected and signaled a very mild easing bias while acknowledging numerous uncertainties may require action.
Monetary policy will continue to be accommodative and its current projections and assumptions will see growth strong enough to have inflation settle near the middle of the target range, the RBNZ said in a statement.
But it also said numerous uncertainties remain, particularly in respect to the international outlook, and policy may need to be adjusted if they weaken the outlook for the domestic economy.
An important risk was heightened political uncertainty - likely in reference to uncertainty related to the surprise victory by Donald Trump in the U.S. presidential elections - as was elevated market volatility.
The RBNZ appeared more confident in its inflation outlook - slightly raising inflation projections for December 2016 to 1.1% form 1.0% in the August policy statement. But it pushed back the projection for 2.0% inflation to December 2018 from September 2018 in the August statement.
"Annual inflation is expected to rise from the December quarter reflecting the policy stimulus to date, the strength of the domestic economy and reduced drag from tradables inflation," the RBNZ said.