New Zealand Finance Minister Grant Robertson urged RBNZ to include house price stability as part of its broad monetary remit. The triggered speculations that the central bank would refrain from launching another round of massive stimulus, including negative interest rates.
In a letter to RBNZ Governor Adrian Orr, Robertson said he’s concerned with “recent rapid escalation in house prices, and forecasts for this to continue”. He’s also “concerned about the potential that these price increases may present a financial stability risk to the economy, particularly when monetary policy returns to more normal settings.”
“With an extended period of low interest rates, and some time before housing supply can catch up with demand, now is the time to consider how the Reserve Bank may contribute to a stable housing market,” he added. “Undertaking this work is not to suggest the Reserve Bank bears responsibility for house prices, but simply that it should have regard to something that is influenced by monetary policy.”
Orr said RBNZ will consider the government’s suggestion. At the same time “”there are many long-term, structural issues at play.”
