The coronavirus' grip on the world economy is an entirely different situation to the global financial crisis (GFC) of 2007 and 2008, Reserve Bank governor Adrian Orr says.
Speaking to TVNZ1's Breakfast this morning, he was confident that New Zealand would be able to weather the storm brought by Covid-19.
Yesterday the Reserve Bank slashed New Zealand's official cash rate - the interest rate money is loaned to banks - to a record low of 0.25 per cent.
It's been locked in at that level for the next 12 months and it's very unlikely to drop lower or into the negatives, Mr Orr says.
Instead, if it's necessary, there are other options to help the economy.
"We have plenty of firepower left with us," he says.
"The reason we stopped at 0.25 is because negative interest rates are a little bit more complex, and the banks are very busy focusing on their customers.
"If we have to go further, we have other tools that are just as effective.
"Quantitative easing, in a sense, just means we enter the market, we buy government bonds, so we're buying government debt off other people, and that provides the cash to other people and again keeps the interest rates down and low."
Markets around the world have crashed due to the coronavirus outbreak and redundancy is on the table at Air New Zealand, foreseeing 30 per cent of its staff will be cut.
While it's drawn comparisons to the global financial crisis, Mr Orr says that's not a helpful or productive thing to do.
1 NEWS’ Katie Bradford reports on the Reserve Bank slashing the cash rate to 0.25 per cent.
"The global financial crisis might give you scalers within our memory to talk about, but I believe [this] is actually easier to manage in a sense," he says.
"We know what's happening, we've got time to prepare, we can see the endgame coming as the virus works its way through. It enables us to be better managed, stay calm and work our way through."
"The global financial crisis was one where the financial system just locked up and no one really knew what's next."
At 2pm today, the Finance Minister Grant Robertson is announcing a major support package in reaction to the coronavirus outbreak.
Mr Orr has seen the package and is confident it'll be effective.
"There is significant targeted effort, particularly around health, as well as broad based fiscal policy responses. They're on high alert."
Finance Minister Grant Robertson’s multi-billion dollar relief package for businesses hit by the Coronavirus Pandemic will be covered live by Jack Tame on TVNZ1 and 1NEWS.co.nz from 2-3pm today.
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