NZIER’s Shadow Board is reported to favor more QE over negative OCR

According to the latest report released by the New Zealand Institute of Economic Research (NZIER) on Monday, a majority of the members of its Shadow Board favor an expansion of the New Zealand Reserve Bank’s (RBNZ) quantitative easing programme over adopting a negative Official Cash Rate (OCR).

Key takeaways

“Overall, the consensus amongst the Shadow Board is that more stimulus would be required over the next twelve months, with the majority favoring an expansion of the Reserve Bank’s quantitative easing programme.

There was little support amongst the Shadow Board for the OCR going into negative territory at the upcoming meeting, although some members thought such a move would be required over the coming year.

Members noted a negative OCR was unlikely to be effective in stimulating the economy while highlighting the risks which include encouraging people to save more in order to achieve their savings goals (thus reducing spending) and reducing business confidence.

Increasing its asset purchase programme was generally seen as a more effective way for the Reserve Bank to support the Government in stimulating the economy.”

more to come ...