The sluggish New Zealand economy is "somewhere near" a turning point, Reserve Bank deputy governor Geoff Bascand said.

Bascand, in an interview with international business news service Bloomberg, said the central bank could cut interest rates as soon as February if the economy does not improve as expected.

"We actually think the economy is somewhere near a turning point," Bascand told the agency.

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"We've put a lot of stimulus in. We've got a bit longer to see how it's transmitting. There's time to see how that plays out and make a call in February if needed," he said.

The Reserve Bank surprised the financial markets by keeping its official cash rate unchanged at 1.0 percent when most expected to see a cut to 0.75 per cent.

House prices are on the move, according to REINZ data. Photo / File.
House prices are on the move, according to REINZ data. Photo / File.

This was after bank, in another surprise move, cut its rate by a greater-than-expected 50 basis points to its current level in August.

Bascand said the economy was going through a weaker stage, "but we're expecting still that the amount of stimulus there in the economy is going to pull it up".

The Reserve Bank, in yesterday's statement, said developments since the August Statement did not warrant a change to the already stimulatory monetary setting.

The bank noted that New Zealand's trading-partner growth had slowed.

"However, New Zealand's export commodity prices have been robust, underpinning a positive terms of trade.

"The lower New Zealand dollar exchange rate this year is also providing a useful additional offset to the weaker global economic environment," the bank said in its statement.

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The bank expects domestic activity to pick up in 2020 supported by low interest rates, higher wage growth, and increased government spending and investment.

The New Zealand dollar rallied after the Wednesday's announcement to over U$64c - where it has largely remained - from US63.3c just before the release.

Westpac senior markets strategist Imre Speizer said Westpac's economists had been detecting up a pickup in the economy for some time, which was why they had originally predicted the rate would not change at yesterday's announcement.

The bank changed its call to a cut just before Wednesday's release.

"We have seen the impact (of a pickup) on a number of fronts, and that's exactly what
the Reserve Bank has seen," Speizer said.

"The overall mix of events since August and now have been roughly neutral," he said.

Looking ahead, Speizer said it was hard to make a case for a significant deterioration in the New Zealand economy from now till the end of the year.

Any negative influences were more likely to come from offshore in the form of continued worsening of world trade relations, or a change for the worse in the US economy.

Real estate data out today showing house prices had shifted higher was a "significant positive" for the economy, he said.

The Real Estate Institute release said house prices across New Zealand increased by 8.2 per cent in October to a new record high of $607,500, up from $561,500 in October 2018.

For Auckland, median house prices increased by 0.8 per cent to $868,000 – the highest price in 19 months, the institute said.