RBNZ cut OCR by 0.75% to 0.25%

Discussion in 'Current Affairs' started by Silverman99, Mar 16, 2020.

  1. Silverman99

    Silverman99 Well-Known Member Silver Stacker

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    This was an emergency rate cut in response to the growing negative economic implications of the COVID-19 virus.

    The key points in the RBNZ statement are:
    • Negative implications to the NZ economy from global COVID-129 outbreak is, and will continue to be, significant
    • NZ’s financial system remains sound and major financial institutions are well capitalised and liquid
    • Ensuring banking system continues to function normally
    • Committee agreed unanimously to keep OCT at 0.25% for at least 12 months
    • Committee agreed if further stimulus is required, large scale asset purchase programme of NZ Govt bonds preferable to further OCR reductions
    • There will be no OCR review on the scheduled25th March meeting.
    • NZ Govt operating an expansionary fiscal policy, has imminent intentions to increase support with fiscal package to provide economic stimulus
    • Members met for extraordinary session on 15th March in response to the deteriorating economic situation from COVID-19
    • Demand for NZ’s goods & services will be constrained, as will domestic production due to the outbreak
    • Staff advised that OCR of 0.25% currently lower limit, given operational readiness of financial system for very low/negative interest rates
    • Spending and investment will be subdued for an extended period while responses to the virus evolve
    • Large scale asset purchases of NZ govt bonds next best tool available; committee agreed additional tools mot needed at this points
    The NZD is lower in immediate response.
     
    66rounds, GoldenEye and ozcopper like this.

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