Economics
New Zealand’s Central Bank Signals Openness to Looser Policy
- Central bank determined to head off low inflation, deflation
- Orr speaks again of negative rates, wants bond yields lower
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New Zealand central bank Governor Adrian Orr signaled his intent to continue to loosen monetary policy as required, saying he’s determined to head off unnecessarily low inflation or even deflation.
While persistently low interest rates could lead to undue risk-taking and pose financial stability risks, Orr said these were outweighed by the damage that stagnant or falling prices could cause as the economy struggles to recover from the Covid-19 pandemic. The Reserve Bank is also motivated to limit the the rise in unemployment as much as possible, he said in a speech Wednesday in Wellington.