New Zealand’s central bank will begin offering cheap loans to lenders within weeks to further reduce borrowing costs and stimulate the economy as it recovers from the coronavirus pandemic.
Policy makers agreed to begin a new Funding for Lending Program in December, which “will reduce banks’ funding costs and lower interest rates,” the Reserve Bank said in a statement Wednesday in Wellington. As expected, the RBNZ kept the official cash rate at a record-low 0.25% and left its Large Scale Asset Purchase program unchanged at NZ$100 billion ($68 billion), but reiterated it is prepared to use additional tools such as negative rates if required.
Should the outlook for inflation and employment justify even more stimulus next year, the new lending program would help to ensure the effectiveness of anegative cash rate. Still, a surge in property prices and the economy’s robust recovery from a first-half recession is beginning to raise some doubts that the RBNZ will need to implement a sub-zero OCR.
The New Zealand dollar initially fell after the statement before trading slightly higher at 68.40 U.S. cents at 2:32 p.m. in Wellington.
119,944 in U.S.Most new cases today
+4% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23
-0.7572 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23
4.7% Global GDP Tracker (annualized), Sept.