PHOTO: Reserve Bank governor Adrian Orr. Photo: RNZ / Dom Thomas
Analysis – The government is asking the Reserve Bank (RBNZ) to change from arsonist to firefighter in the housing market.
As part of a suite of measures to try to cool the political, social, and financial flames caused by a 20 percent rise in house prices in the past year, Finance Minister Grant Robertson is suggesting the RBNZ explicitly consider the effect its monetary policy measures has on the housing market.
“I am concerned that the recent rapid escalation in house prices, and forecasts for this to continue, are affecting the government’s ability to meet the economic objectives set out in the Remit,” he said in his letter to RBNZ governor Adrian Orr.
The RBNZ has copped much criticism for the surge in house prices, with fingers pointed at its moves to force interest rates lower through its $100 billion bond buying programme, backing bank loans to businesses, lifting loan to value ratios (LVRs), and its new no-strings attached funding for lending programme (FLP), which is due to start next month.
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