In May 2023 Financial Stability Report, RBNZ Governor Adrian Orr highlighted that the country’s financial system is well-placed to handle the higher interest rate environment and international financial disruptions. Global inflation continues to persist at levels significantly above central banks’ policy targets. Although central banks have recently slowed pace of tightening, the full impact of previous tightening measures remains to be seen.
Governor Orr explained that “to date there have been limited signs of distress in banks’ lending portfolios, with only a small share of borrowers falling behind on their payments.” This resilience, he said, reflects ongoing strength of the labor market and the ability of borrowers to adjust their spending or use previous savings and repayment buffers.
