The Reserve Bank of New Zealand unexpectedly kept its official cash rate/OCR unchanged at a record low of 1 percent on November 13th 2019, surprising markets that expected a 25 bps rate cut. The U.S. Federal Reserve this morning cut its benchmark rate by a full percentage point to near zero and said it will boost its bond holdings to cushion its economy from the outbreak.Over the weekend, New Zealand’s government introduced what it said were some of the most stringent measures by a nation to control the spread of the virus, requiring almost every individual who enters the country, including citizens and residents, to self-isolate for 14 days.“This will be a major economic disruption, most obviously for the tourism and travel sectors, but it will ripple through the economy more widely,” Westpac New Zealand senior economist Michael Gordon said. TEForecast "The (bank) decided a lower OCR (Official Cash Rate) is necessary to support the outlook for employment and inflation consistent with its policy remit," governor Adrian Orr said.The New Zealand dollar dropped half a US cent to 65.55 US cents on the announcement, with analysts tipping another rate cut before the end of the year. The comments came at a time that the U.S. and China are engaged in a trade war and many other central banks are cutting rates.New Zealand’s economy relies on the country selling agricultural goods abroad, in particular milk powder to China, and on tourism. This means if you buy the bond today for $109, at maturity you will get back just $100. Finance Minister Grant Robertson is due to make a “multi-billion dollar” announcement on Tuesday.“The Government, through the Treasury, and the Reserve Bank have been working closely together to co-ordinate our actions as we respond to the economic impacts of COVID-19,” Robertson said.RBNZ Governor Adrian Orr will hold a press conference at 11 a.m. local time. The board noted that fiscal policy continues to provide the primary support to the economy, as it is appropriate given the pace and scale of the economic shock. The Committee added that if a further stimulus is required at some point, a Large Scale Asset Purchase programme of New Zealand government bonds would be preferable to more OCR reductions. The spotlight is now firmly on fiscal policy to step Policy makers are responding to the severe economic disruption caused by the global spread of the coronavirus. The airline is reviewing its cost base and will need to start the process of job cuts, it said. He said the rate cut was a “dramatic warning.”The number of deaths through July 2020 is 8% to 12% higher than it would have been if the coronavirus pandemic had never happened. "The negative economic implications of the Covid-19 virus continue to rise warranting further monetary stimulus." The central bank cut its official cash rate to a record low 0.25 percent from 1 percent. Auckland, NZ. New Zealand's central bank cut interest rates to a record low Wednesday, the first reduction in two-and-a-half years as policymakers look to provide support in the face of slowing economic growth. The central bank added it is prepared to provide additional stimulus as well as potentially expanding the large scale asset purchase programme and the use of more monetary policy tools as needed. Swap rates and government bond yields fell.The impact of the virus on the economy will be significant, the RBNZ said in a statement.“Demand for New Zealand’s goods and services will be constrained, as will domestic production. Central bank says QE is next step if more stimulus required The Trading Economics Application Programming Interface (API) provides direct access to our data. New Zealand’s property market is heating up again and a fresh round of interest-rate cuts in response to the coronavirus could give it another shot in the arm. New Zealand’s central bank cut its benchmark interest rate to an all-time low of 1% on Wednesday as it forecast tougher economic conditions ahead. What Kiwibank’s interest rate cut means and why they did it This month, Kiwibank reset its variable interest rates by 1%, from 4.40 to 3.40%. “We see QE as inevitable in the near future and it will work hand in hand with fiscal policy.


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