[Bloomberg]-The Central Bank of New Zealand stated that if banks use low-interest loans aimed at lowering borrowing costs, the possibility of implementing negative interest rates will decrease.

"If banks don't like negative interest rates, then converting as much loan program financing as possible into low interest rates can reduce the need for negative interest rates," New Zealand Central Bank Assistant Governor Christian Hawkesby gave Bloomberg an interview in Wellington on Thursday Shi said. "So that includes bank incentives, because it is related to the amount of monetary stimulus needed."

The Central Bank of New Zealand yesterday issued a more optimistic forecast for the economic outlook and stated that the new loan program financing can provide considerable additional stimulus to the economy. Subsequently, investors’ expectations regarding the central bank’s implementation of negative interest rates next year have significantly cooled. Hawkesby said that while a considerable degree of uncertainty still exists, negative interest rates are still a choice, and whether the loan financing plan works or not will be the key to deciding whether to make this choice.

Original title RBNZ Says Negative Rates Less Likely if Banks Use Cheap Loans


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