RBNZ Minutes: Committee reaffirms a lower or negative OCR remains under consideration
|The Reserve Bank of New Zealand’s (RBNZ) monetary policy decision was accompanied by the minutes of the meeting, which showed that the board members reaffirmed that funding for lending programme (FLP), a lower or negative OCR, purchases of foreign assets, and interest rate swaps remain under consideration.
Additional points
Members agreed a lower OCR would be complementary to its other monetary policy tools, and that it was prepared to lower the OCR to provide additional stimulus if required.
Committee endorsed staff advice to continue front-loading purchases under asset purchase programme.
Committee agreed that providing term funding at rates near the OCR via an FLP would lower funding costs, borrowing costs.
The committee maintained its view that a package of an FLP and a lower or negative OCR could provide an effective way to deliver additional monetary stimulus.
Outlook for inflation and employment remained subdued.
There is substantial uncertainty about the future spread of covid-19 both domestically and globally, and how economic, health, and social activity will adapt.
Some members noted it is harder to estimate what the maximum sustainable level of employment is under these conditions.
Committee reached a consensus to hold rate, maintain LSAP programme of max nz$100 bln by June 2022.
Also reached consensus to direct the bank to prepare to have an FLP ready to deploy before the end of calendar year.
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