WELLINGTON: New Zealand’s central bank says it plans to start selling government bond holdings in July at a rate of NZ$5bil (US$3.2bil or RM14.06bil) every fiscal year, but has not ruled out using quantitative easing (QE) again if necessary.

       The Reserve Bank of New Zealand (RBNZ), which said in February it would start the sale of bonds purchased in its pandemic-induced QE programme, released details of the planned sale after it signed a memorandum of understanding with the New Zealand Debt Management office.

       “Reducing bond holdings will provide the monetary policy committee (MPC) more scope to use large-scale asset purchase programmes or LSAPs in future,” the central bank said in a statement.

       The reduction of its NZ$50bil (RM142bil) bond holdings would be done through both bond maturities and sales of New Zealand Government Securities to New Zealand Debt Management, it said.

       New Zealand’s central bank last year chose to cut short its NZ$100bil (RM283bil) bond buying programme, amid nagging inflation worries globally.

       Since, then inflation in New Zealand has reached a three-decade high and the central bank has hiked the cash rate five times and signalled further hikes are coming.

       The RBNZ said sales are expected to continue in a gradual and predictable manner, subject to market conditions, until the LSAP bond holdings have reduced to zero in about mid-2027.

       “The MPC reserves the right to change the rate of sales or halt sales should conditions change, but do not expect such changes to be common,” it added. — Reuters