Breaking: RBNZ’s Orr: Not contemplating negative interest rate at this point, Kiwi drops
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Following the overnight 25bps rate cut announcement by the Reserve Bank of New Zealand (RBNZ), Governor Orr is on the wires now, noting that they are not contemplating a negative interest rate at this point.
Further quotes
Negative impact of coronavirus on NZ economy is and will continue to be significant.
NZ financial system remains sound and major financial institutions well liquidised and solid.
It will very much be a case of monetary and fiscal policy working together.
On negative rates, most effective tool at this time will be large scale asset purchases.
Not all banks are ready for negative interest rates.
Expecting growth and inflation to be lower.
Virus is expected to have a severe impact on our people and our economy.
Working with assumption that impact will be of medium duration, a 12-month period.
Watching all financial markets pricing closely.
Banks not asking for more liquidity.
NZD/USD reaction
The Kiwi is giving up most of its RBNZ unexpected rate cut-led rally to 0.6153, as it now trades near 0.6020, down 0.55% so far, as markets seem to turn risk-averse amid growing coronavirus concerns.
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