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10 Feb 2015
RBNZ should target property investors - NZ FinMin
FXStreet (Bali) - The RBNZ should target property investors, notes NZ FinMin Bill English, cited in an article by the team a Stuff.co.nz, adding that the Central Bank should deploy special rules in the housing sector, given that the RBNZ has no room to increase interest rates any further amid low inflation levels.
Key points - via Stuff
"No asset price can go up at over 10 per cent a year forever. Sometime it'll stop," English told reporters, the Stuff notes.
While the government was working to increase supply, especially in Auckland, English admitted the Reserve Bank faced a "dilemma" as it probably could not raise interest rates to slow borrowing with inflation already below the 1-3 per cent target.
"They've got a bit of a dilemma here. Very low interest rates environment. There's no good reason to put interest rates up. They don't really have that tool to enable them to control the housing market," English said, adding that it appeared interest rates would be flat for "a while".
English said he had seen the Reserve Bank's earlier comments about the prospect of new rules for property investors, and that he understood it was now consulting with the major banks about how this would work. If it chose to implement the rules, English said the Beehive would support the decision.
"We support the bank following its legislative mandate, paying attention to financial stability, taking the measures they believe are required," English said, adding that the Reserve Bank would need to make the case for the introduction of new rules, which had already begun.
"I think the governor's speech [last week] started to make that case."
Key points - via Stuff
"No asset price can go up at over 10 per cent a year forever. Sometime it'll stop," English told reporters, the Stuff notes.
While the government was working to increase supply, especially in Auckland, English admitted the Reserve Bank faced a "dilemma" as it probably could not raise interest rates to slow borrowing with inflation already below the 1-3 per cent target.
"They've got a bit of a dilemma here. Very low interest rates environment. There's no good reason to put interest rates up. They don't really have that tool to enable them to control the housing market," English said, adding that it appeared interest rates would be flat for "a while".
English said he had seen the Reserve Bank's earlier comments about the prospect of new rules for property investors, and that he understood it was now consulting with the major banks about how this would work. If it chose to implement the rules, English said the Beehive would support the decision.
"We support the bank following its legislative mandate, paying attention to financial stability, taking the measures they believe are required," English said, adding that the Reserve Bank would need to make the case for the introduction of new rules, which had already begun.
"I think the governor's speech [last week] started to make that case."