"The negative economic implications of the COVID-19 virus continue to rise warranting further monetary stimulus ... The negative impact on the New Zealand economy is, and will continue to be, significant. Demand for New Zealand's goods and services will be constrained, as will domestic production. Spending and investment will be subdued for an extended period while the responses to the COVID-19 virus evolve," said the RBNZ in a statement.
However, it is recognized that New Zealand's financial system remains sound and its major financial institutions are well capitalized and liquid, said the RBNZ.
Meanwhile, the New Zealand government is operating an expansionary fiscal policy and has imminent intentions to increase its support with a fiscal package to provide both targeted and broad-based economic stimulus, said the statement.
The New Zealand dollar exchange rate has also depreciated against the trading partners acting as a partial buffer for export earnings, it added.
Tough travel restrictions have been imposed by the New Zealand government from the weekend to protect the country and its Pacific neighbors from COVID-19. The measures are expected to further affect the economy.
There are currently eight confirmed cases of COVID-19 in New Zealand.
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