WELLINGTON (Reuters) - Market reaction to the New Zealand central bank's unexpected shift to an easing bias this week showed that they understood what policymakers were focused on, Governor Adrian Orr said on Friday.
"What I was pleased with from the outcome of that discussion (around the review) is that markets have shown they understand what we are focused on," Orr said in a response to a question after he delivered a speech in Wellington.
"If financial markets watch us and we watch them then we are just looking at a mirror, we are not learning anything. So markets have to be forward looking and work very hard to learn what we are trying to achieve," Orr said.
At a policy review on Wednesday, the Reserve Bank of New Zealand kept rates unchanged but surprised markets by flagging the next move in rates was likely to be a cut. The currency fell sharply and bond and bill futures rallied as a rate cut was priced in.
(Reporting by Praveen Menon; Writing by John Mair; editing by Grant McCool)
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