RBNZ Head of Financial Markets Vanessa Rayner said in speech, “unconventional” monetary policy tools will “likely remain mainstream for as long as global central bank policy rates remain at, or near record lows”. With the OCR at current low level, RBNZ has “less space” to cut interest rates further. Also, there’s a “limit to how negative rates can go before causing adverse side effects”.
“This means that other tools that utilize the balance sheet have become an important part of the ‘package’ of monetary policy instruments that global central banks have turned to,” she added. The tools can work together in different ways, to “better calibrate an ‘optimal package’ of monetary policy tools in response to future shocks”.
