Lessons from unconventional monetary policy for New Zealand
Closer to home, the RBNZ has itself moved closer to unchartered territory, cutting the OCR to an all-time low of 2.00% in August, projecting further reductions, and publishing two scenarios that would push the OCR to around 1.00%.
It is not our central view that the RBNZ will be forced to follow the same path taken overseas. Indeed, the Governor set out in his speech last week that the RBNZ would prefer not to have to cut interest rates aggressively. However, with the OCR already at all-time lows, as part of considering a range of plausible outcomes, it seems timely to consider what unconventional monetary policy might look like in New Zealand.
The main unconventional tools employed overseas have been:
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