Headlines from the report are via Reuters
- the New Zealand financial system remains well placed to support the economy
- house prices remain above sustainable levels despite recent declines
- rising global interest rates have put downward pressure on the prices of assets such as equities & housing
- expect to see a slowdown in high-DTI lending over the coming months
- while gradual adjustment in house prices to more sustainable level is desirable for stability of financial system, larger correction remains a possibility
- if interest rates need to increase more than currently anticipated to contain inflationary pressure, this could lead to a softening in labour market over time
- expect the increasing trend in capital ratios will continue during next few years as remaining elements of capital review are implemented
- proceeding to design a framework for operationalising DTI restrictions
- our 2022 stress test programme investigating risk for banks from higher interest rates & falling house prices
- underlying weaknesses in some industries may be revealed as targeted fiscal support is removed
- intend to have framework for operationalising DTI restrictions finalised by late 2022
- slowdown in global growth, increasing trade protectionism, or further sanctions could amplify trade impacts in NZ
NZD/USD is off a few tics. There isn't much of surprise in the report.
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Note 'DTI' is debt to income and refers to a macroprudential tool in NZ.