That means while an effective zero bound for interest rate is far from the most likely outcome in New Zealand, it can’t be ruled out. This is not a prediction, just a statistical observation outlining the challenges of setting monetary policy. An inability to predict what might happen next is no excuse for not preparing for what could happen.
That’s true for businesses, governments and central banks. It is in light of both economic theory and recent global experience that we have been assessing what alternative monetary policy tools may be available to the Reserve Bank of New Zealand – and their relative desirability. We are fortunate, unlike many other OECD economies, to have the time to prepare for such possible needs.