RBNZ: Keeping the door open – Westpac

The Reserve Bank of New Zealand (RBNZ) aggressively expanded its quantitative easing programme and left the door open to a negative OCR, economists at Westpac Institutional Bank brief.

Key quotes

“The RBNZ expanded its Long Term Asset Purchase programme (LSAP) from $33bn to $60bn. [...] The RBNZ also mentioned that, should more stimulus be required in the future, purchasing foreign bonds was a possibility.”

“The RBNZ certainly made it clear that it would adopt a negative OCR in the future if the situation required it and it was operationally feasible.”

“We are forecasting that the OCR will be reduced to -0.5% in November this year. We are the only major bank forecasting a negative OCR.” 

“We expect inflation to remain low for longer, and unemployment to remain high for longer.”