Reserve Bank of New Zealand monetary policy announcement for 12 August 2020

  • Large Scale Asser Purchase program (LSAP) given a boost to 100bn NZD

That is a significant lift, estimates had been on 75 to 90bn, 100bn exceeds these

Headlines via Reuters:

  • says QE eligible assets remain same
  • agreed that package of additional monetary instruments must remain in active preparation
  • says package includes a negative OCR
  • says purchase of foreign assets remain an option
  • says output and employment have recovered sooner than projected
  • says any significant change in the global and domestic economic outlook remains dependent on the containment of the virus

More:

  • says policy will continue to provide support
  • will provide additional stimulus as necessary
  • says commodity prices robust, partially offset by higher NZD

RBNZ minutes:

  • committee directed RBNZ to actively prepare a package of additional monetary policy tools if needed
  • committee agreed any future move to a lower or negative ocr, if complemented by a funding for lending programme, could provide an effective way to deliver stimulus
  • central bank purchases could absorb a larger proportion of the total market than previously thought without affecting market functioning
  • larger LSAP programme would mean purchases could be front-loaded in order to put more downward pressure on wholesale interest rates
  • expanding the LSAP programme with the aim of adding more stimulus by lowering retail interest rates and the exchange rate

more to come (as soon as the RBNZ website comes back,. its crashed under the traffic flow!)