RBNZ’s Conway: Softer GDP and CPI data doesn't mean the central bank will cut interest rates

The Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway said on Tuesday that  the downward revisions to economic activity data does not mean less inflation pressure in the economy.

Key quotes

“Lower GDP indicates weaker demand, but also that the productive capacity of the economy was lower than previously assumed. That is, the recent GDP revisions do not necessarily mean that capacity pressures in the economy are much lower than previously assumed.”

“To sum up, monetary policy is working, with the economy slowing and inflation falling. But we still have a way to go to get inflation back to the target midpoint [of 2%].” 

“I'm being very careful here, I'm not going to give away anything about the future path of the OCR.”

Market reaction

The NZD/USD pair is trading higher by 0.01% on the day to trade at 0.6134, as of writing.