An honorable member of the Coffee Shop Has Just Posted the Following:
New Zealand unexpectedly slashed interest rates to a record low on Thursday in a "shock and awe" tactic, stunning financial markets and sending the kiwi currency tumbling.
But the giant farming cooperative Fonterra this week cut the price it pays for milk solids to a nine-year low of NZ$3.90 per kilogram, less than half the NZ$8.65 paid at the height of a China-driven dairy boom two years ago.
Wheeler was also troubled by pessimistic expectations about inflation, which was just 0.1 percent in 2015, well below the bank's target of 1.0-3.0 percent.
"This is a concern because it increases the risk that the decline in expectations becomes self-fulfilling and subdues future inflation outcomes," he said.
ANZ Bank said the base rate could go as low as 1.75 percent as the RBNZ looks to maintain growth and prevent the economy stalling.
Finance Minister Bill English on Wednesday downplayed the impact of the dairy industry's difficulties on the broader economy, saying it continued to grow at 2.0-3.0 percent.
https://sg.finance.yahoo.com/news/ze...--finance.html
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