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The RBNZ kept the door wide open for NIRP last week as they hinted that discussions with financial institutions about preparing for a negative OCR are ongoing, per Nordea.

Key quotes

“The RBNZ could be one of the cases to watch in terms of whether NIRP gains momentum world-wide again, since the RBNZ has a relatively small balance sheet as % of GDP, and hence may be tempted to move first as it is less expensive to go negative when you have a small balance sheet.”

“RBNZ didn’t sound overly concerned about squeezing out foreign holders of NZGBs as ‘it will weigh on our currency and transmit positively to the economy’. NZD looks very vulnerable after this.”

“RBNZ is considering buying foreign assets in the QE program as well (a de facto FX intervention to weaken NZD).”