WELLINGTON, Nov. 11 (Xinhua) -- The Reserve Bank of New Zealand (RBNZ) decided to provide additional monetary stimulus to its economy in order to meet its consumer price inflation and employment remit, said a RBNZ statement on Wednesday.
According to the statement, a Funding for Lending Programme (FLP) will be launched in December this year, which will reduce New Zealand banks' funding costs and lower interest rates.
The RBNZ will also continue with the Large Scale Asset Purchase (LSAP) Programme up to 100 billion New Zealand dollars (68.9 billion U.S. dollars), and retain the Official Cash Rate (OCR) at 0.25 percent.
The RBNZ did not rule out the use of negative OCR as a future monetary policy option.
"Progress has been made on the Reserve Bank's operational ability to deploy an FLP and a negative OCR. These instruments can be mutually supportive in bolstering economic activity if necessary," said the statement.
The RBNZ cut the OCR by 75 basis points to its current level on March 16 amid the deep concern for COVID-19 and said it would remain at that level for at least 12 months.
On Wednesday's statement, RBNZ said both international and domestic economic activity since its August Monetary Policy Statement, has proved more resilient than earlier assumed. However, the outlook for global economic activity remains dependent on the containment of COVID-19.
RBNZ expected an ongoing increase in the country's unemployment as the economy adjusts. Domestic consumer price inflation is also projected to remain at the lower-end of the remit target range for a period, and inflation expectations remain subdued, it said.
Therefore, it is agreed that the RBNZ's monetary policy will need to remain stimulatory for a long time to meet the consumer price inflation and employment remit, and that it must remain prepared to provide additional support if necessary, said the RBNZ.
New Zealand is currently at COVID-19 Alert Level 1, with no restriction on domestic gathering.
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