Economics
New Zealand Eyes Sweden as Roadmap for Negative Interest Rates
- RBNZ studies other central banks as it readies new stimulus
- Former Riksbank deputy says sub-zero rates worked well
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As New Zealand’s central bank prepares plans for taking interest rates negative to support its recession-hit economy, Sweden’s experience is emerging as the most relevant guide.
The Reserve Bank is studying the other countries that have employed negative rates and the Scandinavian kingdom -- a small, open economy like New Zealand -- is drawing particular attention. Sweden’s Riksbank imposed negative rates for five years to head off the threat of deflation.
The controversial monetary policy tool has been used by only a handful of central banks in Europe and Japan. Australia’s Reserve Bank is cool on the idea, but there is renewed interest internationally as policy makers seek new ways to bolster their virus-battered economies.