Reserve Bank of New Zealand Governor Wheeler speaking the BIS conference on cross-border financial linkages
- FX rate rises in Asia have generated difficult headwinds
- Changes to FX regimes, capital controls not the answer
- Says macroprudential tools may help address stability concerns relating to housing
- Says loan limits allowed delay in rate tightening
- LVR limit to be removed when housing eases
The full text of his speech: Cross-border financial linkages: Challenges for Monetary Policy and Financial Stability
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On a related issue, you’d think the RBA would have paid attention to the RBNZ macroprudential tools and susbsequent developments in the housing market in New Zealand.
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More (via Bloomberg):
- Limits on low-deposit lending have reduced house price inflation, credit and the spending associated with wealth effects
- Impact on CPI inflation pressures is same as a 25-50 bps increase in official cash rate
- Reduction in housing pressures has allowed a delay in tightening, “thereby reducing the incentive for any additional capital inflows into the New Zealand dollar in search of higher yields”
- Limits are not permanent and will be removed once housing market pressures have moderated and RBNZ is confident there will not be a resurgence of house price inflation