RBNZ monetary policy decision and statement

Monetary Policy Committee has agreed to significantly expand the Large Scale Asset Purchase (LSAP) programme potential to $60 billion

  • up from the previous $33 billion limit
  • LSAP programme includes NZ Government Bonds, Local Government Funding Agency Bonds and, now, NZ Government Inflation-Indexed Bonds.

More:

  • members agreed that LSAP program can be scaled as needed
  • RBNZ expects to see retail interest rates decline further
  • prepared to provide fixed term loans to banks if needed
  • QE expansion aims to cut borrowing costs quickly, sharply
  • prepared to add other assets to LSAP program
  • committee reached a consensus on policy decision
  • forecasts show annual inflation of -0.4% in Q1 2021
  • prepared to cut cash rate further if needed
  • balance of economic risk remains to downside
  • keeping interest rates low for foreseeable future
  • committed to achieving employment, inflation objectives
  • forecasts show no chance of rate cut through Q1 2021
  • sees average ocr in 1q 2021 at 0.25%
  • sees average ocr in 4q 2020 at 0.25%
  • sees average ocr in 3q 2020 at 0.25%
  • sees GDP contracting 21.8% in 2q 2020

Text:

Still to come:

  • Governor Orr's press conference at 0300GMT

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Background:

RBNZ monetary policy decision and statement