Wellington, September 26 (Reuters) – Reserve Bank of New Zealand (RBZZ) Governor Adrian Orr said on Thursday that it was unlikely that the central bank would have to use unconventional monetary policy tools, although it was important to prepare.
"Our current view is that we probably won't need 'unconventional' monetary policy tools. But we will be sorry we are not ready, "Ohr said in a speech in New Zealand announcing the bank.
Ohr said the global low-interest rate environment poses new challenges for central banks and many questions have been raised about the possibility of negative interest rates and alternative monetary policy strategies.
"At the moment we are thinking hard about these issues, because it makes sense to do so with caution – it's best to set the roof when the sun is shining."
He said many central banks are facing the challenge of keeping inflation under constant target, lowering policy rates to stimulate spending and increase demand. (Reporting by Praveen Menon; Editing by Jimmy Sarkar)