RBNZ Governor outlines housing direction

Release date
26 February 2021

In remarks for a Monetary Policy Statement presentation to the Canterbury Employers’ Chamber of Commerce today, Reserve Bank Governor Adrian Orr has elaborated on the direction received from the Minister of Finance, to have regard to house price sustainability when making its financial stability policy decisions.

“The direction makes specific how our financial stability policies and actions can assist the Government’s housing policy objectives, in line with our financial stability objective of promoting a sound and efficient financial system.”

“We will be considering our financial stability policy settings via our prudential tools – like loan-to-value ratios, bank stress testing, and capital requirements against particular types of mortgage lending. This is done with a view to moderating housing demand, particularly from investors, to best ensure house price sustainability," Mr Orr said.

“Importantly, our Monetary Policy Committee remit targets remain unchanged. We remain only focussed on maintaining low and stable consumer price inflation and contributing to maximum sustainable employment, as recently outlined in our Monetary Policy Statement.”

“The Committee will continue to be very transparent in explaining the impact of all of our monetary policy decisions on the housing market, as we are for many other variables.”

“We remain committed to our current stimulatory monetary settings until we are confident that consumer price inflation will be sustained at the 2 percent per annum target midpoint, and that employment is at or above its maximum sustainable level. Meeting these requirements will necessitate considerable time and patience.”

More information:

The Governor’s presentation today is part of a series of outreach events to explain the key messages in the February Monetary Policy Statement, released on Wednesday.

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