PHOTO: STUFF ASB economists say they expect the cash rate to be cut to a low of 0.5 per cent this cycle but it could drop much lower.
New Zealand’s Reserve Bank could cut the official cash rate (OCR) as low as -0.75 per cent in a worst-case scenario, but borrower shouldn’t expect to mean they would be paid to hold their mortgages.
ASB economists say they expect the cash rate to be cut to a low of 0.5 per cent this cycle.
But “if the proverbial does hit the fan” there were other courses of action the Reserve Bank could take, including cutting the official cash rate to its minimum, which the bank economists said was about -0.75 per cent.
Negative cash rates have been used overseas, including by the European Central Bank, Bank of Japan and Swiss National Bank.
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