What is the current official cash rate in New Zealand, and why was it held low?

Question

Accepted Answer

New Zealand's Official Cash Rate Remains at 0.25 Percent to Stimulate Economic Recovery

New Zealand's official cash rate is currently set at 0.25 percent. This historically low rate was maintained by the Reserve Bank of New Zealand (RBNZ) as a measure to support the recovery of the economy, which has been significantly impacted by the coronavirus pandemic.
Bond-Buying Programme Significantly Increased

In addition to holding the interest rate steady, the RBNZ announced an expansion of its large-scale asset purchase (LSAP) programme. The total value of assets the central bank intends to purchase has been increased to NZ$100 billion, a substantial rise from the previously established NZ$60 billion cap. This quantitative easing measure aims to inject further liquidity into the financial system and encourage borrowing and investment.
Consideration of Further Monetary Tools

The RBNZ has indicated its readiness to implement additional measures to bolster economic activity. The central bank is actively exploring a range of monetary policy tools, which include the potential for negative interest rates and the provision of low-cost funding facilities for commercial banks. These options signal the RBNZ's commitment to providing further stimulus if deemed necessary.
Economic Uncertainty and Lockdown Measures

The decision to maintain accommodative monetary policy was made against a backdrop of renewed economic uncertainty. New Zealand recently reintroduced lockdown measures in Auckland following the emergence of a new cluster of coronavirus cases. The RBNZ acknowledged that ongoing health uncertainties pose a downside risk to its baseline economic forecasts, underscoring the need for continued policy support.

Reading history

Hide →

This history is cleared when the page is closed.

What is the current official cash rate in New Zealand, and why was it held low?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

2

0

0

Share with friends