Saturday, May 15, 2021
Times of Georgia
HomePoliticalRBNZ Supports Focus On Housing

RBNZ Supports Focus On Housing


The Reserve Bank – Te Pūtea Matua welcomes the
direction it has received today from the Minister of
Finance. The Bank is tasked with considering how it can
contribute to the Government’s housing policy objectives,
consistent with its financial stability objective of
promoting a sound and efficient financial system.

The
Minister of Finance has announced he expects the Reserve
Bank to have regard to house price sustainability when
making its financial stability policy
decisions.

“The Minister’s direction is in tune
with our recent advice to the Government in which we
detailed the many influences on house prices, including the
actions of the Reserve Bank,” Reserve Bank Governor Adrian
Orr says.

The direction (under section 68B of the
Reserve Bank Act) requires the Bank to have regard to the
the impact of its actions on the Government’s policy of
supporting more sustainable house prices, including by
dampening investor demand for existing housing stock, which
would improve affordability for first-home buyers.

The
Monetary Policy Committee’s (MPC) targets meanwhile remain
unchanged, that is to maintain stability in consumer price
inflation and contribute to maximum sustainable
employment.

However, the Bank will be required to
outline, amongst other things, the impact of its decisions
on the Government’s housing objectives. The replacement
MPC remit, which is effective from March 1 2021, requires
the Committee to assess the effect of its decisions on the
Government’s policy relating to sustainable house
prices.

Mr Orr says the adjustments increase the focus
on understanding and communicating the impact of the
Bank’s decisions on house price
sustainability.

“We have a long-standing commitment
to transparency about our policy actions and approaches, and
this will continue,” Mr Orr says.

The Bank welcomes
the Minister’s request for more information and analysis
on debt-to-income ratios and interest-only mortgages, and
will respond in due course.

More
information:

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