The governor of the Reserve Bank of New Zealand (RBNZ) said that the central bank’s remit targets “remain unchanged” despite a new requirement to take the country’s housing market into consideration when setting rates.
RBNZ governor Adrian Orr outlined the bank’s direction in remarks for a Monetary Policy Statement presentation to the Canterbury Employers’ Chamber of Commerce on Friday, following an announcement from finance minister Grant Robertson that the RBNZ should “take into account government policy relating to more sustainable house prices, while working towards its objectives.”
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“The direction makes specific how our financial stability policies and actions can assist the government’s housing policy objectives, in line with our financial stability objective of promoting a sound and efficient financial system,” said Orr. “We will be considering our financial stability policy settings via our prudential tools – like loan-to-value ratios, bank stress testing, and capital requirements against particular types of mortgage lending. This is done with a view to moderating housing demand, particularly from investors, to best ensure house price sustainability.”
“Importantly, our Monetary Policy Committee remit targets remain unchanged,” Orr added. “We remain only focussed on maintaining low and stable consumer price inflation and contributing to maximum sustainable employment, as recently outlined in our Monetary Policy Statement. The committee will continue to be very transparent in explaining the impact of all of our monetary policy decisions on the housing market, as we are for many other variables.”