Wellington
New Zealand’s central bank slashed interest rates to almost zero Monday as Prime Minister Jacinda Ardern warned the coronavirus could have a worse economic impact than the global financial crisis.
The official cash rate, already at a record low of 1.0 percent, was cut to 0.25 percent in a surprise move designed to protect New Zealand from a virus-induced recession.
However, markets shrugged off the tactic—with the benchmark NZX 50 closing down 3.56 percent—and Ardern’s tone was pessimistic when she addressed reporters several hours after the announcement.
‘The preliminary advice I received from Treasury this weekend is that the economic impact of the virus on New Zealand could be greater than the global financial crisis,’ she said.
Pressed on whether that could mean a recession, as occurred in 2008, Ardern replied: ‘Well, based on that advice, obviously, because the GFC led to a recession.’—APP
