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UPDATE 2-RBNZ softens language on NZ dollar after recent falls, amid political uncertainty

political uncertainty@

* Rates kept at 1.75 pct, as expected

* Lower NZ dollar would "help," previously said it was "needed"

* Currency eases a little after decision (Updates throughout, adds quote)

WELLINGTON, Sept 28 (Reuters) - New Zealand's central bank on Thursday softened its language on the New Zealand dollar and firmly stuck to its neutral stance, against a backdrop of political uncertainty after an inconclusive national election over the weekend.

The Reserve Bank of New Zealand kept interest rates at records lows of 1.75 percent for a sixth consecutive meeting and said monetary policy would stay accommodative - sticking to the language in its statements of recent months.

The central bank said a lower New Zealand dollar would help stoke inflation, down from "needed" in its previous statement in August, noting that the exchange rate had eased since then.

"A lower New Zealand dollar would help to increase tradables inflation and deliver more balanced growth," said acting Governor Grant Spencer in a statement.

The New Zealand dollar eased to $0.7210 from around $0.7223 before the statement was released.

The Kiwi, which was the 11th most traded currency in the world in 2016, hit its lowest levels in over three weeks on Wednesday after no major party won a majority of seats in parliament in a vote over the weekend, leaving the make-up of the next government unclear.

Last month, the New Zealand dollar fell more than 4 percent against the U.S. dollar to be the worst performer amongst major currencies, and underperformed its Australian counterpart as political jitters and worsening data weighed.

"It's been softened a bit but again it had to because the Kiwi fell," said Imre Speizer, senior markets strategist at Westpac, referring to the RBNZ language. "So that's just a recognition that the Kiwi has moved down."

The decision was Spencer's first as head of the bank. He has taken over as acting governor for six months after Graeme Wheeler stepped down at the end of his five-year term.

Seventeen economists polled by Reuters had expected the RBNZ to stand pat and all 19 who made forecasts beyond Thursday expect the bank to keep rates on hold until year-end.

POLITICAL BACKDROP

The country's election on Saturday gave no major party enough seats in parliament to govern alone, meaning it will now likely take weeks to form a government, with the impact on monetary policy still unclear.

Prime Minister Bill English's National Party secured 58 seats, ahead of the 52 won by the Labour Party and the Green Party, which have a working agreement together, in Saturday's election. That has left both sides courting the nationalist New Zealand First party to win its nine seats and reach the minimum 61 needed to form a government.

Labour is proposing adding employment to the central bank's inflation targeting regime, while New Zealand First favors greater currency intervention.

But Westpac's Speizer didn't expect any major changes to monetary policy: "If there are changes as a result of a different government ... we think they would be minimal and not significant from a monetary policy direction point of view." (Reporting by Charlotte Greenfield and Ana Nicolaci da Costa in WELLINGTON, Wayne Cole and Swati Pandey in SYDNEY; Editing by James Dalgleish)