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New Zealand central bank watching labour market ‘very closely’

FILE PHOTO: Pedestrians walk near the main entrance to the Reserve Bank of New Zealand located in central Wellington, New Zealand

SYDNEY (Reuters) – New Zealand’s central bank is watching the country’s labour market “very closely” to decide if negative interest rates will be needed to further support the economy, a senior official said on Friday.

The Reserve Bank of New Zealand (RBNZ) lowered its cash rate to a record low 0.25% earlier this year and has repeatedly flagged negative rates and cheap funding for banks as other possible monetary policy options in its toolkit.

The central bank will be operationally prepared to implement negative rates early next year, although the decision would be “contingent on the health of the economy”, RBNZ Chief Economist Yuong Ha said during a webinar.

“If and when the time comes we have those tools available.”

(Reporting by Swati Pandey; Editing by Tom Hogue)

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