New Zealand's central bank governor said on Thursday that inflation will need to sustainably be at its target midpoint range before any tightening of monetary conditions is considered.
"We need to be patient... We need to make sure that actual inflation is sustainably at that midpoint before we jump to tightening conditions," Governor Adrian Orr told a parliamentary committee.
The Reserve Bank of New Zealand (RBNZ) left interest rates unchanged on Wednesday and said it would continue to do so until it was confident inflation was sustained at the 2% per annum target midpoint and employment was at the maximum sustainable level.
Orr said RBNZ wants to ensure the economy does not get into a "disinflation, deflation spiral."
New Zealand's success in containing the coronavirus has helped usher in a quicker economic recovery, with key data like employment, inflation and business confidence recording better than expected results.
RBNZ however said that risks still remain for New Zealand's trade- and tourism-focused economy until the pandemic rages on globally.
"You can only be so confident on what New Zealand can do on its own... We need the rest of the world to come join the party as well for us to be on that strong sustainable path," Orr said.
"Until that happens, continued monetary stimulus is necessary," he added.
(Reporting by Praveen Menon; Editing by Jonathan Oatis and Hugh Lawson)
