New financial sector regulations are also reinforcing increased demand for safe assets in order to meet higher collateral requirements and liquidity buffers.8 All told, we think that the neutral rate of interest is lower than it was in the years leading up to the crisis because of these structural developments.
15  Notes: New Zealand (post-CR) shows an estimate of the RAC ratios of the four largest New Zealand banks assuming the Capital Review proposals are implemented as consulted on, plus a 1% management buffer.