For the last 8 months I have been teaching at a small liberal arts college in Morocco, Al Akhawayn University.  It is located 1600m high in a small town in the Atlas Mountains, about 60 km from Fez. 

Morocco went into full lockdown on Friday March 20 at 6pm, just after the 80^th case was reported. Its reported trajectory has been very similar to that as New Zealand but, after a slow start, the response has been dramatically faster. At the moment there is a ban on all movement in public spaces, schools and universities are closed and education is on-line, non-essential work places are closed, and people have been issued certificates restricting their movement to two shopping trips per week. Borders have been closed for more than a week  – this is for all people, residents and non-residents, in and out. The ban is indefinite, presumably until the government is convinced the threat is controlled. 

I am writing this as the response is clearly different to that in New Zealand, even though both countries are reporting a similar infection experience. You may be interested to know what a preventive lockdown looks like.

With COVID-19 causing concerns, the RBNZ announced to cut the official cash rate to 0.25% on 16 March.  Given this the OCR is at a low level now- leading to open consideration of other potential “unconventional tools” such as Large Scale Asset Purchases (LSAP) or more commonly termed as Quantitative Easing.  With this now taking place around the world I wanted to discuss these tools.

Upfront I want to note that monetary policy doesn’t do anything to prevent a pandemic – so the main purpose of most of these tools in the short term is to ensure liquidity and avoid the insolvency of firms and financial institutions that would be solvent in the long-term.

But coming out of the pandemic the ability to “boost demand” will be important in the future- so having an idea about how the tools can fill that aim when the time comes is useful.