UPDATE 1-NZ says unconventional monetary policy not on cards; announces package for virus

(Adds details, more comments from finance minister)

WELLINGTON, March 9 (Reuters) – New Zealand’s finance minister said on Monday that unconventional monetary policies were not in the cards at the moment, as he announced plans for a business continuity package to support people affected by the coronavirus epidemic.

Grant Robertson’s comments come ahead of a speech by Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr on Tuesday about how the bank would assess and use unconventional monetary policy tools if needed. The speech is not expected to discuss current economic conditions or the Reserve Bank’s outlook for the Official Cash Rate (OCR).

Robertson said he had spoken with Orr about the speech and it was important to get some clarity on options that are available.

“Were unconventional monetary policy to be deployed, which I might say is not on the cards, but were it to be deployed at some time in the future, there would be discussions with the government,” Robertson said at a news conference.

“That would be a situation where fiscal policy and monetary policy come close together,” he added.

RBNZ is set to make its next interest rate decision on March 25, amid policy easing by the U.S. Federal Reserve Bank and other central banks around the world in recent weeks due to growing economic concerns over the coronavirus epidemic.

New Zealand businesses have been affected by the virus outbreak in China, its biggest trading partner.

Robertson said the cabinet on Monday approved a plan to develop a business continuity package. The package would include a targeted wage subsidy programme and working capital support for affected companies, among others.

He said the government was also working on tax policy options to help reduce the impact on businesses.

RBNZ said in a separate statement on Monday that New Zealand’s banks are ready to respond to the impact of a coronavirus outbreak which has the potential to hit banking operations, staff and funding. So far there have only been five confirmed cases of coronavirus in New Zealand. The government extended its restriction on travellers from China and Iran by another seven days. (Reporting by Praveen Menon; Editing by Kim Coghill and Gerry Doyle)

Source: Read Full Article