New Zealand’s central bank to buy local government debt in stimulus plan

New Zealand’s central bank to buy local government debt in stimulus plan

SYDNEY (Reuters) – New Zealand’s central bank on Tuesday said it would buy up to NZ$3 billion ($1.79 billion) of local government debt to ease liquidity strains in the funding market as part of steps to cushion the economy from the fallout of the coronavirus.

The Reserve Bank of New Zealand (RBNZ) said the new measure would expand on its Large Scale Asset Purchase programme which has been buying government debt.

“The Bank had observed signs of increasing illiquidity and dislocation in the Local Government Funding Agency (LGFA) market in particular in recent weeks,” it said in a statement.

($1 = 1.6787 New Zealand dollars)

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