Official Cash Rate kept at 0.25 per cent

The Reserve Bank has held the cash rate unchanged at a record low 0.25 percent, and taken no new measures to cushion Covid-19 pandemic.

Source: 1 NEWS

The official cash rate has been at its record low since mid-March, before the Covid-19 lockdown was imposed.

The Reserve Bank (RBNZ) has introduced a number of unconventional measures to pump money into the financial system since the lockdown began, including its and large scale asset purchase programme (buying of government bonds), the suspension of loan-to-value restrictions (LVR) and backed loans to small businesses.

The RBNZ's Monetary Policy Committee, which sets the OCR, said it will keep its LSAP programme at $60 billion.

In its statement, the committee said global disruption caused by Covid-19 is persisting, leading to lower economic activity, employment and inflation overseas and in New Zealand.

"The negative economic impact on New Zealand is exacerbated by the required international border restrictions, as the vast majority of the world battles to contain the pandemic. The appreciation of New Zealand's exchange rate has placed further pressure on export earnings," the statement said.

"The main support for the economy in this environment is appropriately being provided through increased fiscal spending. However, monetary policy will continue to provide significant support."