RBNZ: Will begin five-year exit from QE bond holdings in July

The Reserve Bank of New Zealand (RBNZ) said in a statement on Thursday, it will commence selling off the government bonds acquired during its quantitative easing (QE) program gradually over the next five years, Bloomberg reports.

Key quotes

“The Reserve Bank will sell bonds back to the Treasury Department’s debt management office at a rate of NZ$5 billion ($3.2 billion) per June year in order of maturity date, beginning with the longest maturity.”

“Sales will continue in a “gradual and predictable manner” until holdings have reduced to zero, which is expected to be in mid-2027. Shorter-maturity bonds will mature without reinvestment or sales.”

“The Reserve Bank and NZDM will continue to collaborate closely to ensure the efficient functioning of the New Zealand government bond market.”

Market reaction

NZD/USD remains under pressure near 0.6435, down 0.15% on the day, as of writing. The kiwi fails to benefit from rising yields on 10-year kiwi bonds, which hit its highest level since June 2015 on the above headlines.