RBNZ’s Orr: Ready to act further, with more firepower in reserve to keep the financial taps turned on

In an editorial article for a New Zealand media outlet on Sunday, the Reserve Bank of New Zealand (RBNZ) Governor Orr said: “we are ready to act further, with more firepower in reserve to keep the financial taps turned on.”

Additional quotes

“We cut the Official Cash Rate from 1 percent to 0.25 percent and committed to keep it there for at least the next year.

We also gave the banks a clear go ahead to use the capital they have stored … We estimate this gives banks an extra $47 billion of lending capability.

They have a similar amount again to lend if needed without reaching their minimum capital reserves. 

The government’s recent fiscal measures including wage subsidies – on top of New Zealand’s already significant welfare system – will support people through this period.

We’ve also made provisions to ensure there is plenty of cash available for people to access all around New Zealand under all conditions.” 

NZD/USD implications

The Kiwi failed to sustain its recovery from eleven-year lows of 0.5470, despite broad-based US dollar sell-off. The spot reversed nearly 140-pips from Friday’s high of 0.5882 to settle the week around 0.5650.

The rundown could be associated with the Wall Street plunge, as the sentiment soured amid persisting coronavirus pandemic fears, with the number of cases globally and economic risks continued rising.