Some commentary suggests a causal relationship between hiking interest rates and unemployment increasing. It’s not quite that simple, but the days of record high employment are probably numbered.
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Yes, the bank would effectively pay you to borrow money. But negative interest rates won’t please savers, nor will they meet the big challenges of economic recovery.
New Zealand’s new government wants the central bank to focus on maximising employment. But experience from other countries shows this is unlikely to change policy.
