RBNZ tweaks forecasting models and cuts key rate

Graeme Wheeler announced 25bp rate cut after risks to inflation increase

The Reserve Bank of New Zealand (RBNZ) has adjusted its models to account for inaccurate forecasts, it said today (March 10), as it delivered another interest rate cut.

Headline inflation has fallen steadily since the second half of 2014, and has dropped to 0.1%. It has not rebounded at the pace expected by the RBNZ; many central banks have also struggled to forecast inflation.

Part of the reason for its overly optimistic forecasts has been "on the tradables side, a persistently higher-than

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