NZ’s tepid productivity has driven down ‘neutral’ interest rates, says RBNZ

Wed, 02 Oct 2013

Oct. 2 (BusinessDesk) – Neutral interest rates in New Zealand, the theoretical level of borrowing costs that neither stimulates nor restricts the economy, have fallen in recent years and the nation’s weak productivity growth is the most likely culprit, the central bank says. Reserve Bank of New Zealand assistant governor John McDermott told a business meeting in Auckland that the bank’s assessments suggest a 90-day bank bill rate of 4.5 percent is “neutral” for the economy, though with about 50 basis points of wiggle room on each side. That’s...

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