The Reserve Bank of New Zealand (RBNZ) on Wednesday lowered its interest rate to 2.25% from 2.50%. This decision was not expected by market participants.
The RBNZ Graeme Wheeler pointed out on Wednesday that further monetary policy easing was possible.
"Further policy easing may be required to ensure that future average inflation settles near the middle of the target range," he said.
He noted that there were risks to the outlook from the weakness in the dairy sector, the fall in inflation expectations, the high net immigration, and pressures in the housing market.
The RBNZ governor also said that inflation was low, driven by lower prices for fuel and other imports, adding that headline inflation was expected to rise over 2016.
Wheeler pointed out that the outlook for global growth deteriorated since the December, due the slowdown in emerging markets, and slower growth in Europe.