Neutral rate down to around 3.5% in New Zealand – RBNZ deputy
Rate is challenging to estimate, but central bank’s models and surveys suggest it has fallen
The Reserve Bank of New Zealand (RBNZ) estimates the country’s neutral rate of interest has fallen to around 3.5% in recent years, deputy governor John McDermott said today (July 26).
The RBNZ uses a range of models, surveys and financial market prices to calculate the unobservable neutral rate, which is meant to represent the level of the policy rate that would be neither expansionary nor contractionary, McDermott said in a speech in Auckland.
Outputs from the RBNZ’s models range from 2.6% to
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