Second, a currency union with Australia might reduce average New Zealand interest rates a little. Over the last decade or so, Australian long-term interest rates have been pretty similar to those in New Zealand, but for much of that period (though not currently) Australia’s short-term interest rates were appreciably lower than those in New Zealand.
In other words, when thinking about favourable financing conditions, what matters is not only the level of financing conditions but the duration of policy support, too. All sectors of the economy need to have confidence that financing conditions will remain exceptionally favourable for as long as needed – especially as the economic impact of the pandemic will now extend well into next year.