Fitch Affirms Ratings

Fitch Ratings affirmed New Zealand's long-term foreign-currency issuer default rating at 'AA' with a positive outlook. Fitch has also affirmed the local currency rating at 'AA+' with a stable outlook.

• In its report Fitch says New Zealand's ratings are underpinned by very high governance standards and a demonstrated commitment to prudent fiscal management, balanced against high levels of household and net external debt.
• Another positive is the economy's resilience to shocks, as evident during the coronavirus pandemic New Zealand's effective suppression of the virus and macro-policy response has facilitated a V-shaped recovery, with GDP having returned to pre-pandemic levels by 3Q20.
• Fitch expects monetary policy to remain accommodative with the RBNZ keeping the policy rate at 0.25% through 2022, given below target inflation and labour market slack. Fitch do not foresee the RBNZ moving to a negative policy rate with the strong economic recovery, although this remains a possibility in the event downside risks materialise. Purchases of government bonds under the RBNZ's large-scale asset purchases (LSAP) programme are set to continue, although the pace of purchases is likely to moderate because of improving economic conditions and reduced bond issuance.