2020.03.2304:00:00UTC+00New Zealand Ramps Up Stimulus To Combat Covid-19 Impact

The New Zealand government on Monday announced further support for the economy as the country prepares for the Alert Level 4 in the fight against covid-19.

The central bank has decided to implement NZ$30 billion asset purchase programme as the negative economic implications of the coronavirus outbreak continued to intensify.

The cabinet agreed to remove the cap on the wage subsidy scheme, which will inject a further NZ$4 billion into the economy over the next eleven weeks.

The changes mean the forecast cost of the wage subsidy scheme is being lifted to NZ$9.3 billion Finance Minister Grant Robertson, said. This assumes 50 percent of businesses access the scheme.

The government, central bank and retail banks have agreed in principle to significant temporary support for mortgage holders and a business finance guarantee scheme for those impacted by COVID-19.

The cabinet agreed to freeze all rent increases and to look to extend no-cause terminations to protect people during this difficult time.

"Like the rest of the world, we are facing the potential for devastating impacts from this virus," Prime Minister Jacinda Ardern, said. "But, through decisive action, and through working together, we have a small window to get ahead of it."

The monetary policy committee of the Reserve Bank of New Zealand decided to implement a Large Scale Asset Purchase programme (LSAP) of government bonds.

The central bank will buy up to NZ$30 billion of government bonds in the secondary market over the next twelve months.

The bank said it will monitor the effectiveness of the programme and make adjustments and additions if needed.

Last week, the central bank had cut its interest rate by 75 basis points to 0.25 percent.