RBNZ Deputy Governor Geoff Bascand said resurgence of coronavirus infections is “a major risk to out outlook”. “If we get periods of resurgence and have longer lockdown periods then the unfortunate consequence of that is we will see downside risks to our outlook…things will be worse. We would have to consider doing more in terms of our monetary stimulus,” he said.
While New Zealand has been doing better domestically, “this is a big economic shock and its not over,” he added. “It was a little bit of wonderful feeling when we had 100 days of containment, but its a long haul to recovery”.
Separately, chief economist Chief Economist Yuong Ha said the central bank would like a weaker exchange rate and lower bond yields. The expansion of QE from NZD 60B to NZD 100B reflects that intention. Negative rate remains a policy option for RBNZ, but it’s not inevitable.
