What will New Zealand’s policymakers do in a crisis?

Our central scenario is that cutting interest rates to 0.5% will be enough to weather the economic slowdown in 2020. And if required, fiscal policy and macroprudential tools could be used to help stimulate demand. However, if the global economy slows more sharply than we anticipate we think the RBNZ would not hesitate to use unconventional monetary policy. Negative interest rates would probably be the Bank’s preferred tool in that case.