New Zealand's central bank reiterated on Tuesday that further policy easing will be needed to ensure that the inflation rate increases and settles near the middle of its target range. The central bank is mandated with keeping annual inflation at between 1 and 3%. The annual rate was 0.4%in the second quarter. In a speech, Assistant Governor John McDermott said that September quarter inflation, to be announced October 18, is expected to be low. The central bank kept the official cash rate on hold at 2.0% in September but left the door open for more rate cuts. McDermott said: “Our current projections and assumptions indicate that further policy easing will be required to ensure that future inflation settles near the middle of the target range.” The assistant governor's speech has sparked a new bout of selling on the NZD as traders continue to price in a rate cut at their November meeting. We stay bullish on the AUD/NZD.