PHOTO: LYNN GRIEVESON/NEWSROOM Reserve Bank Governor Adrian Orr: “Looking at the effectiveness of interest rates, both at higher interest rate levels and the current low levels, the answer is they are as effective as ever.”
Reserve Bank Governor Adrian Orr thinks a negative official cash rate would be more effective at boosting the economy than the RBNZ creating money to buy bonds or other assets. He details the options for unconventional monetary policy in an interview with Bernard Hickey.
The Reserve Bank is more actively thinking about what it should do if the official cash rate gets to zero per cent, including looking at options such as charging banks negative interest rates on their deposits with the central bank, buying bonds or other assets, and even creating and granting cash to every taxpayer or resident in a process known as “helicopter money”.
RBNZ Governor Adrian Orr also suggested taxing cash holdings to encourage savers to either spend or invest to stimulate the economy.
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