RBNZ announced today to launch a NZD 30B Large Scale Asset Purchase (LASP) program of government bonds. The purchases will be “across a range of maturities” in the secondary market over the next 12 months. It aims to “provide further support to the economy, build confidence, and keep interest rates on government bonds low.” RBNZ will monitor the effectiveness and “make adjustments and additions” if needed.
Over the weekend, Governor Adrian Orr said in an article that “the evolving coronavirus outbreak has unsettled communities around the world, creating uncertainty about the future.” “New Zealand is no exception” but “we start in the best possible relative position”. The central bank already cut the Official Cash Rate form 1.00% to 0.25% and remains “committed to keep it there for at least the next year”. He added, “we are ready to act further, with more firepower in reserve to keep the financial taps turned on.”
Separately, Prime Minister Jacinda Ardern announced today that the country is “now preparing to go into self isolation”. All non-essential services, schools and offices will be shut over the next 48 hours. Supermarkets and pharmacies will remain open.