Independent Review Launched into NZ’s Covid Monetary Policy Response

“The purpose of the review is to identify any lessons New Zealand could learn to improve the monetary policy response to future major events,” Ms Willis said.

The Government has announced an independent review into New Zealand’s monetary policy response to the Covid-19 pandemic, aiming to draw lessons that could strengthen decision-making during future economic shocks.

Finance Minister Nicola Willis said the review will examine the Reserve Bank of New Zealand’s unprecedented interventions during the crisis, including record-low interest rates and large-scale financial market support measures.

“The purpose of the review is to identify any lessons New Zealand could learn to improve the monetary policy response to future major events,” Ms Willis said.

“An independent review means the conclusions found can be objective and constructive.”

Unprecedented Reserve Bank Actions During the Pandemic

During the Covid-19 emergency, the Reserve Bank implemented extraordinary monetary policy settings to stabilise the economy, protect employment and support businesses.

Key measures included:

• Cutting the Official Cash Rate (OCR) to 0.25 percent

• Deploying additional monetary policy tools beyond conventional interest rate changes

• Introducing the Large Scale Asset Purchase (LSAP) programme, involving significant government bond purchases

Ms Willis said these interventions helped prevent deeper economic disruption during the height of the pandemic.

“These actions helped to preserve jobs and keep businesses afloat,” she said.

Indirect Impacts: Inflation, Asset Price Surge and LSAP Losses

The Government said the review will also consider the longer-term indirect consequences of the response.

These included:

• Inflation reaching its highest levels in decades

• Estimated losses of around $10.3 billion on the LSAP programme

• A sharp spike in asset values, with house prices rising by approximately 30 percent in a single year

The combination of high inflation and rapid housing market escalation has remained a key point of public and economic debate.

“The purpose of the review is to learn from experience,” Ms Willis said.

Focus on MPC Decisions, Tools and Communication

The review will assess decisions made by the Reserve Bank’s Monetary Policy Committee (MPC), along with the analysis and advice underpinning those decisions.

It will cover:

• MPC decision-making processes

• Communication and transparency during crisis conditions

• Use of unconventional tools such as LSAP

• Coordination between monetary policy and fiscal policy during the pandemic response

The Government says understanding the interaction between Government spending measures and Reserve Bank interventions will be central to improving future crisis frameworks.

International and Domestic Expertise Appointed

Two leading monetary policy experts have been appointed to conduct the independent review:

• Dr Athanasios Orphanides, former Governor of the Central Bank of Cyprus, former member of the European Central Bank Governing Council, and MIT professor of global economics and management

• Mr David Archer, former Reserve Bank of New Zealand Assistant Governor and former head of the Central Banking Studies Unit at the Bank for International Settlements

Their combined experience spans both domestic central banking leadership and global monetary policy governance.

Timeline for Completion and Public Release

The review is expected to be completed in August 2026, with the findings scheduled for public release in September 2026.

Ms Willis said the process is intended to strengthen New Zealand’s preparedness for future economic crises by ensuring monetary policy tools are effective, transparent and well-coordinated.