Large-Scale asset purchases

Page updated: 28 July 2021

The Reserve Bank halted additional asset purchases under the Large Scale Asset Purchase (LSAP) programme on 23 July 2021.

The Large Scale Asset Purchase (LSAP) programme has been an effective policy instrument to-date, market conditions and functioning have improved substantially since the programme’s inception in 2020.

On 14 July 2021, the Monetary Policy Committee agreed that further asset purchases under the LSAP programme were no longer necessary for monetary policy purposes and directed staff to halt purchases by 23 July 2021.

The LSAP programme remains an important tool for supporting the efficient functioning of the New Zealand debt market if required, and remains an important monetary policy tool if needed.

This page provides further details of our Large-scale asset purchases (LSAP) programme, what we bought and when, and our key decisions and announcements for the programme.

How the programme worked

The aim of the programme was to lower borrowing costs to households and businesses by injecting money into the economy.

When we bought assets, this increases their price and so reduces their yield. That means the interest rate, in this case on government bonds, fall. This had the effect of ‘lowering the tide’ on other interest rates in the economy, particularly longer-term interest rates of two years or more. It also reduced the cost of borrowing for households and businesses.

Secondly, when we bought these government bonds, it encouraged the sellers of assets to use the money they received from us to switch into other financial assets like company shares, bonds, or new lending – helping to inject money into the economy.

What we bought

The LSAP programme had the potential to  buy up to $100bn of NZ Government Bonds, Local Government Funding Agency (LGFA) Bonds and New Zealand Government Inflation-Indexed Bonds in the secondary market by June 2022. When the programme was halted in July 2021, about $53 billion of bonds had been purchased.

We published a weekly schedule on the amount of bonds we intended to buy through an auction process. This schedule was reviewed regularly and adjusted as needed to ensure the programme was working as we intended to support jobs and the economy by keeping interest rates low on government bonds.

What the evidence shows

LSAP programmes have been conducted in the euro area, Japan, Sweden, the United Kingdom and United States.

The evidence shows LSAP proved effective in providing much needed support, lowering long-term interest rates and exchange rates, and underpinning economic growth and inflation.

Studies found the government bond purchases worth 10 percent of GDP have, on average, lowered 10-year government bond yields by around 50 basis points.

We expected LSAP will also lower long-term interest rates and the exchange rate in New Zealand.


Proposed weekly schedule for LSAP


Bond purchases results

Bond purchase results can be found on the Open market operations - D3 table


Decisions and announcements

Monetary Stimulus Reduced - 14 July 2021

The Monetary Policy Committee agreed to reduce the current stimulatory level of monetary settings in order to meet its consumer price and employment objectives over the medium-term. 

The Reserve Bank will halt additional asset purchases under the Large Scale Asset Purchase (LSAP) programme by 23 July 2021. The Committee will keep the Official Cash Rate (OCR) at 0.25 percent and the Funding for Lending Programme unchanged.

More information:


Expanded Large-scale asset purchases - 12 August 2020

The Monetary Policy Committee agreed to significantly expand the LSAP programme potential to $100bn, up from the previous $60bn limit.

Our Large-scale asset purchases programme will buy up to $100bn of NZ Government Bonds, Local Government Funding Agency (LGFA) Bonds and NZ Government Inflation-Indexed Bonds in the secondary market by June 2022.

Supporting documents:


Expanded Large-scale asset purchases - 13 May 2020

The Monetary Policy Committee has agreed to significantly expand the Large-scale asset purchase (LSAP) programme potential to $60 billion, up from the previous $33 billion limit. The LSAP programme includes NZ Government Bonds, Local Government Funding Agency Bonds and, now, NZ Government Inflation-Indexed Bonds.

More information:


Expanded Large-scale asset purchases - 7 April 2020

We have added $3 billion of Local Government Funding Agency (LGFA) debt to our Large-scale asset purchase programme (LSAP). This represents approximately 30 percent of the total LGFA debt on issue, and takes the total size of the LSAP to $33 billion over 12 months.

More information:

More information:

Read about our monetary tools to support the economy

More details about the bond programme process (23 March 2020)

Principles governing our monetary policy tools

RBNZ Bulletin: Aspects of implementing unconventional monetary policy in New Zealand May 2018