RBNZ Sees Prolonged Monetary Support As Necessary

Key snips from the RBNZ Monetary Policy Review:

• The Monetary Policy Committee agreed to continue with the Large Scale Asset Purchase (LSAP) Programme up to $100 billion. (...) The Official Cash Rate (OCR) is being held at 0.25 percent in accordance with the guidance issued on 16 March.
• The Committee endorsed staff advice to continue front-loading purchases under the LSAP programme, while maintaining flexibility to adjust purchases as market conditions dictate.
• Reflecting the possible need for further monetary stimulus, the Committee noted the progress being made on the Bank's ability to deploy additional monetary instruments. The instruments include a Funding for Lending Programme (FLP), a negative OCR, and purchases of foreign assets. (...) Members also agreed that the alternative instruments can be deployed independently, and noted that the FLP would be ready before the end of this calendar year.
• The Committee noted that the banking system is on track to be operationally prepared for negative interest rates by year end. Members agreed with the previous assessment that a lower OCR would be complementary to its other monetary policy tools, and that it was prepared to lower the OCR to provide additional stimulus if required.
• Commodity prices for New Zealand's exports remain robust, but this has been partly offset by the New Zealand dollar exchange rate moderating the return to local export producers.
• Members agreed that monetary policy will need to provide significant economic support for a long time to come to meet the inflation and employment remit, and promote financial stability.