WELLINGTON, March 14 (Reuters) - New Zealand's central bank Monday said that inflation expectations are a key issue for monetary policy.
RBNZ Assistant Governor John McDermott noted Monday "inflation expectations have fallen significantly recently across a range of measures, and this is a concern for the Bank, contributing to the need for low interest rate settings."
Late last week the central bank surprised markets with a 25 basis point rate cut to 2.25 percent and signaled more to come.
McDermott said there has been a "material decline" in inflation expectations and they risk becoming embedded in future wage and price decisions.
"If the recent material decline in a broad range of inflation expectations measures continues, the Bank would need to reconsider the outlook for interest rates," he said.
