PHOTO: The Reserve Bank of New Zealand Photo: RNZ / Alexander Robertson
The Reserve Bank says any further easy money policy measures will have the simple aim of lowering the cost of borrowing and ensuring banks have enough cheap liquidity to back investment by businesses and spending by households.
In a briefing on its two favoured mechanisms – funding for lending (FLP), and negative interest rates – the central bank said it would have the lending programme ready to go from November, although the final decision on deployment would be made by its Monetary Policy Committee.
Under the FLP, the RBNZ would lend to banks at around the official cash rate (OCR), currently 0.25 percent, with few conditions on how it should be passed on to businesses and households.
“You want it to be freely available and you want it to be taken up, potentially at scale, to lower the funding costs so that they can pass it on,” Assistant Governor Christian Hawkesby said.
He said the design had yet to be finalised but it would be kept simple with as few conditions as possible.
READ MORE VIA RNZ
