RBNZ Governor Adrian Orr said the QE program had been “highly effective” in lowering wholesale interest rates. Given the nation of the coronavirus shocks, the central bank had “plenty of assets to purchase while maintaining our operational independence”.If the program remained effective, “then ongoing large-scale asset purchases would be a very simple story, subject to the markets functioning well”.

He also said a negative OCR could be “efficient” and “effective”, but there was a “limit” to what it could do. FX intervention might lead to currency depreciation “but that could be very short-lived”. Also, the foreign exchange markets are “very large markets”, he added. “You don’t want to stand in front of them. You want to work with them.”

Separately released, New Zealand retail sales dropped -0.7% qoq in Q1, better than expectation of -1.5% qoq. Ex-auto sales rose 0.6% qoq.

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