monetary policies are being stretched well beyond the normal parameters and stresses envisaged when policy frameworks were designed and inflation goals were first specified. ii ) questions that central banks are grappling with in a world of unconventional monetary policy and unprecedented monetary accommodation, several questions are on central bankers ’ minds ; questions such as : • what are the risks that global growth will be revised lower? what is the outlook for commodity prices, and especially oil prices? how can the advanced economies the last five years of merchandise trade growth has been the weakest period since the 1980s. between midoctober 2015 and mid - may 2016 g20 economies introduced new trade measures at the fastest pace seen since 2008. ( wto director general ’ s mid - term report on trade developments issues on 25 july 2016 ). countries with policy rates at or below 0. 5 percent now account for around 65 percent of global gdp. around usd13. 4 trillion of bonds carry a negative yield. global foreign exchange market turnover reached an estimated $ us5. 3 trillion a day in 2013, up from $ us3. 8 trillion in 2007 and $ us1. 5 trillion in 1998. global trading in otc interest rate derivatives – mainly swaps and forward rate agreements – increased almost ten - fold between 1998 and 2013 ( from $ us265 billion in 1998 to $ us2. 3 trillion in 2013 ). the notional amounts outstanding in otc derivatives markets ( mainly interest rate contracts ) reached almost $ us700 trillion in 2013, compared with $ us500 trillion in 2007 and under $ us100 trillion in 1998. chen, j, mancini – griffoli, t, and sahay, r ( 2014 ) “ spillovers from united states monetary policy on emerging markets : different this time? ”, imf working paper wp / 14 / 240. bis central bankers ’ speeches achieve the growth rate needed to generate the “ escape velocity ” to ensure a durable recovery and moderate inflationary pressure? ; • how long are the major central banks likely to run a divergent monetary policy stance ( although they have become more similar as the federal reserve has pushed back expectations of interest rate rises )? when might the federal reserve next raise the fed funds rate? ; • has monetary policy reached the limits of its effectiveness in central banks with negative policy rates and large programmes of quantitative easing? how much scope is there for additional monetary accommodation and will this be deployed – especially by large central banks, such as the

the overall increase in the ocr, which was greater in new zealand. transmission via this channel for both new zealand and australia occurs faster than for many other economies. for example, in the us and some european countries, where 25 - or 30 - year fixed rate mortgages are fairly common10. despite this, monetary policy is still effective in these countries, with other transmission channels playing a more important role11. figure 5 : average outstanding mortgage rates in new zealand and australia source : rba and rbnz while the effectiveness of various monetary policy transmission channels can differ across countries for structural reasons, these can also differ within countries but across business cycles depending on the prevailing economic and financial environment. _ _ _ _ _ _ _ _ _ _ _ _ 10 international monetary fund ( 2024 ) provides insight into the effects of monetary policy across countries through the lens of the mortgage and housing markets. 11 this point is covered in more detail in kent ( 2023 ). an example of a cyclical factor is the ongoing influence of the covid - era fiscal expansion and monetary policy easing. a combination of fiscal policy measures such as the covid - 19 wage subsidy and the implementation of additional monetary policy tools in new zealand, led to a significant increase in liquidity within the financial system contributing to strong deposit growth in commercial banks and an abundance of liquid assets. in turn this bolstered banks ’ stability with prudential liquidity measures12 rising well above their minimum requirements. alongside this, the composition of bank deposits changed significantly with deposit volumes shifting from more traditionally expensive term to cheaper on - call deposits, in part driven by a narrowing in the difference in rates as supply increased13. this chart shows how the proportion of savings held in term deposits, in blue, quickly declined during the covid period, as the rate premium for holding term deposits relative to on - call savings accounts fell. figure 6 : saving deposit rates and the term deposit share of total saving deposits source : rbnz bank balance sheet survey, rbnz estimates deposits account for around 65 percent of total bank funding in new zealand and so the change in composition and overall increase in supply contributed to a significant decline in bank funding costs through that period. as wholesale rates began to increase from mid - 2021 in line with more restrictive monetary policy, banks were however able to maintain lower term and on - call deposit rates for longer largely as a consequence of the higher covid - period level of savings, higher levels of liquidity, and weakening credit