RBNZ Steps Up Pace of Bond Purchases Amid Flood of Issuance

(Bloomberg) -- New Zealand’s central bank signaled it will further increase the pace of its bond purchases amid a flood of new issuance as the government battles the economic fallout from the coronavirus pandemic.

The Reserve Bank will seek to buy NZ$1.8 billion ($1.1 billion) of government bonds next week, according to a schedule published Friday in Wellington. That’s up from NZ$1.35 billion this week and more than twice the NZ$750 million of weekly purchases it said it would aim for when the quantitative easing program was announced March 23.

Interest rate strategists have urged the RBNZ to step up both the pace and scale of its QE program to cap bond yields after New Zealand’s Treasury said it plans issuance of NZ$17 billion this quarter alone. The central bank currently aims to purchase NZ$30 billion of bonds over the coming year.

The RBNZ will seek to buy NZ$600 million at each of next week’s auctions, which will be held on the first three days of next week rather than on Monday, Wednesday and Friday. The Easter holiday begins on March 10. The RBNZ will buy a range of maturities, from May 2021 through to April 2037, today’s schedule shows.

Bond yields edged lower after the announcement.

©2020 Bloomberg L.P.