UPDATE 1-RBNZ eyes a 50bp rate hike – Deputy Governor
* Political decisions will not be closely linked to blockages – Hawkesby
* Blockages only delay spending – Hawkesby
* NZD up after his comments (add quotes, background)
SINGAPORE, Aug. 24 (Reuters) – The Reserve Bank of New Zealand kept interest rates stable last week, mainly because it would have been difficult to argue for a hike on the day of the shutdown of the country, said Deputy Governor Christian Hawkesby. Tuesday.
Hawkesby also said policymakers were considering a 50 basis point hike and future policy decisions were not going to be closely tied to the lockdowns.
His comments, in an interview with Bloomberg, helped the New Zealand dollar extend a recent rebound to a one-week high of $ 0.6932.
The RBNZ was set to hike the benchmark rate last week, but instead left it hanging at a record low of 0.25% after New Zealand detected its first locally-spread COVID-19 cases in six months.
“It was less about COVID preventing us from doing it and it was more about the time to communicate our political decision – August 18 was the right day as the country went into lockdown,” Hawkesby told Bloomberg .
“A 50 basis point move was definitely on the table in terms of options that we actively considered,” he said.
New Zealand on Tuesday recorded its highest jump in daily cases since April 2020, but authorities said it was reassuring that the number was not increasing exponentially.
However, Hawkesby said the trajectory of the virus was not necessarily the main consideration at the central bank.
“Our decisions on monetary policy will not be closely tied to COVID and whether or not we are locked out,” he said.
“The lockdowns have been about delaying the spending schedule rather than cutting spending altogether,” Hawkesby said, while supply shocks have been much more persistent and inflationary.
Expectations of a rate hike in October strengthened slightly on Tuesday with swaps valued for an equal chance that the spot rate would be raised to 0.5%.
RBNZ chief economist Yuong Ha told Reuters on Monday that the outbreak was not a “game changer” for the economic outlook at this point. (Reporting by Tom Westbrook; Editing by Andrew Heavens and Tomasz Janowski)