Spotlight on Reserve Bank governor over contrary market reactionROBERT KITCHIN/FAIRFAX NZSavers are winners in a small way following the Reserve Bank's interest rate cut. The spotlight was on Reserve Bank governor Graeme Wheeler at a Christchurch business function on Friday to explain the contrary reaction of financial markets. The Reserve Bank forecasts continued low inflation, rising to 2 per cent in 2019. Normally when the Reserve Bank cuts the official interest rate the banks follow by cutting deposit rates and mortgage rates, and the exchange rate also falls. The Reserve Bank was concerned people were expecting inflation to fall further which is why it cut its rate, he said.

Source: Stuff August 12, 2016 06:00 UTC