Reserve Bank of New Zealand Chief Economist Yuong Ha said in a Reserve Bank online seminar on Friday that the bank was actively looking at ways to take the Official Cash Rate into negative territory in a way that would boost lending, if it needed to early next year.

The central bank announced on August 12 it would prepare a term lending scheme that could operate with a negative OCR in a way that removed the ‘zero lower bound’ for banks worried about not being able to pass on negative rates to term depositors.However, Ha reassured retail borrowers and savers that they would not have to pay negative interest rates on term deposits or be paid money to take out mortgages. "We don't expect your mortgage rates or deposit rates to go negative. We think there's room for those rates to fall, but they will remain positive," Ha said.

"Don't worry, you won't be forced to pay money to the bank to keep your money there and likewise the bank won't be paying you to take out a mortgage."Ha said there was "reasonably strong" evidence that negative rates would work in lowering retail interest rates. "Yes there is evidence that this thing works. Yes we are actively preparing what they would look like for New Zealand, and if and when we need to, we'd have the confidence to use those tools."