RBNZ base bank stress test assumptions much worse than forecasts

Thu, 17 Sep 2020

The Reserve Bank's base case used in stress testing of banks to gauge the impact of the coronavirus crisis was much worse than its current forecasts but, even so, the banks came through in a position to continue lending and without breaching current capital requirements. In its August monetary policy statement, RBNZ forecast economic growth to fall 5.8 percent, unemployment to reach 8.1 percent and house prices to fall about 9 percent. The base case used in the stress test assumed annual GDP would fall 12 percent, the unemployment rate wo...

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