The Reserve Bank of New Zealand’s (RBNZ’s) new framework for monetary policy implementation and liquidity management is based around supplying an “ample” level of system liquidity (settlement cash). This is achieved through a combination of market operations and facilities, including weekly reverse repo Open Market Operations (OMO) and a standing Overnight Reverse Repo Facility (ORRF).
From 2 April 2026, the weekly reverse repo OMO will be offered on a full allotment basis, meaning it will be possible for counterparties to obtain liquidity in their desired amount subject to pledging sufficient eligible collateral. The eligible collateral for the OMO will be limited to repo-eligible securities issued by the New Zealand government, RBNZ, Local Government Funding Agency and highly rated Kauri bond issuers. This facility is being offered initially at 10 basis points above the Official Cash Rate (OCR) on a floating rate basis, although this pricing will be subject to review.
The ORRF remains the RBNZ’s daily standing facility for obtaining settlement cash against the widest available set of repo-eligible collateral. The increased optionality provided by the ORRF, means that its access is priced at a premium to the weekly OMO. However, it remains an important part of the liquidity management toolkit for both the RBNZ and our counterparties.
The RBNZ considers the use of the ORRF to be consistent with routine liquidity management and is comfortable with deposit takers using the facility as needed, from a prudential and supervisory perspective. The RBNZ also notes that from a monetary policy implementation perspective, it is helpful for the RBNZ’s objectives if the facility is used when it is economically sensible to do so.
Further details on the RBNZ’s approach to monetary policy implementation are outlined in a speech by RBNZ Director of Financial Markets, Adam Richardson.
Media contact
Olivia Neill
Senior Engagement Adviser
Email: [email protected]