* Housing added to RBNZ’s remit, but not mandate
* RBNZ will need to explain impacts on housing regularly
* Debt-to-income ratios and interest only mortgages considered (Adds background, comments from analyst and opposition leader)
WELLINGTON/SYDNEY, Feb 25 (Reuters) - The New Zealand government on Thursday tasked the country’s central bank with considering the impact its monetary and financial policy decisions have on housing prices, a move to help calm the country’s red-hot property market.
Finance Minister Grant Robertson said the Reserve Bank of New Zealand (RBNZ) must take into account government policy relating to more sustainable house prices.
“Today’s announcement is just the first step as the government considers broader advice about how to cool the housing market,” Robertson said in a statement. “We know the rapid increases we have seen in recent months are not sustainable, which has meant many first-home buyers are struggling to access the market.”
The government’s remit stops short of imposing a new monetary policy objective on the RBNZ, a world-first step that RBNZ Governor Adrian Orr had warned against late last year when the government first floated the idea.
Orr had argued that adding housing to the bank’s mandate could make monetary policy less effective and impact financial market efficiency, adding that monetary policy alone could not fix the housing problem.
Orr on Thursday welcomed the remit addition, which takes effect from March 1, while noting that monetary and financial policy were one of “many influences on house prices.” He also stressed the monetary policy committee’s targets - maintaining price stability and maximising sustainable employment - remain unchanged.
Prime Minister Jacinda Arden’s government is under pressure to fix the country’s housing crisis, particularly after the failure of a flagship public housing programme failed. Property prices have sky-rocketed in the last six months thanks to acute housing shortages and a low interest rate environment.
Like many central banks during the coronavirus pandemic, the RBNZ has pushed interest rates to record lows, eased mortgage lending curbs and pumped NZ$100 billion ($70.4 billion) into a quantitative easing programme.
Those measures, while boosting the economy, have fuelled an unprecedented housing market boom. In its latest forecasts, the RBNZ sees house price inflation rising up to 22.4% by the middle of this year, much higher that a November forecast of 7.9% for the year to June.
POLICY TIGHTENING
The New Zealand Dollar touched its highest since August 2017 after the government’s announcement, as it reinforced the view that monetary policy would tighten further. The yield on ten-year New Zealand government bonds hit 1.82%, highest since May 2019.
“Having regard to housing might make the Reserve Bank more gradualist in meeting its inflation and employment target ... that would mean tighter monetary policy than expected in near term,” said Westpac senior economist Michael Gordon.
A direct impact on the housing market itself was less likely, Gordon said.
“The thing that will bring house prices down is higher interest rates,” Gordon said. “It’s still cheaper to borrow now that it’s been in many decades.”
Under the change, the RBNZ will retain autonomy over how its decisions take account of potential housing consequences, but it will need to explain regularly how it has considered housing market outcomes.
The bank will also have to take into account the government’s objective to support more sustainable house prices, including by dampening investor demand for existing housing stock to help improve affordability for first-home buyers.
The RBNZ said it was looking into the government’s request for advice on implementing tools like debt-to-income ratios and interest-only mortgages. (Reporting by Renju Jose and Praveen Menon; editing by Jonathan Oatis, Rosalba O’Brien and Jane Wardell)
"impact" - Google News
February 25, 2021 at 07:29AM
https://ift.tt/3qR9zT6
UPDATE 2-New Zealand central bank to consider impact of monetary policy on housing - Reuters
"impact" - Google News
https://ift.tt/2RIFll8
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "UPDATE 2-New Zealand central bank to consider impact of monetary policy on housing - Reuters"
Post a Comment