SYDNEY (Reuters) -U.S. tariffs have acted as a negative demand shock for a small open economy like New Zealand’s, Prasanna Gai, a member on the Reserve Bank of New Zealand’s rate setting committee, said on Friday.
At an event in Melbourne, Gai said along with the much broader uncertainty shock, these shocks appear to have offset some of the monetary easing that has taken place since 2024.
The RBNZ has cut rates by 300 basis points since August 2024, but the economy has been sluggish. With inflation within its target band of 1% to 3%, investors bet policymakers have leeway to lower borrowing costs further.
(Reporting by Stella Qiu; Editing by Muralikumar Anantharaman)
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