RBNZ Governor supports macro-prudential policy 16 Mar 2018
Macro-prudential policy has been particularly useful in the current environment of globally low interest rates, where monetary policy has been unable to counter the strong housing cycle of recent years,” Reserve Bank Governor Grant Spencer said today to an Auckland event hosted by INFINZ.
In his speech, titled Getting the best out of macro-prudential policy, Mr Spencer said it was almost five years since macro-prudential policy was introduced in the form of LVR restrictions, and now is the right time to review the policy.
“A review, which has been scheduled since macro-prudential policy was introduced will now be conducted jointly with the Treasury as part of the Government’s broader review of the Reserve Bank of New Zealand Act. It is timely to consider ways in which macro-prudential policy may be improved, including through a clearer articulation of the governance structure and greater transparency and understanding. I am keen to see macro-prudential continue to develop as a credible and sustainable policy over the longer term.”
Mr Spencer stressed that the views in the speech are his own rather than a formal Reserve Bank position. He said LVR restrictions have helped the Reserve Bank achieve economic and financial stability objectives by reducing housing-related risk in the banking system.
“I believe that the review should look at whether we have the most appropriate macro-prudential framework for New Zealand circumstances, and what role other macro-prudential instruments could play to enhance and/or complement LVR restrictions.
“We need to ask if the governance structure is sensible too. There are diverse views around these questions” he said.
“While having limited scope to sustainably influence credit and asset price cycles, macro-prudential policy has significantly improved the resilience of banks’ balance sheets to any downturn in the housing market. Some key lessons from our own and international experience are that macro-prudential must be modest in its ambitions and always have a prudential rationale. Macro-prudential policy ultimately can’t control the housing cycle. It must be applied consistently and backed by sound analysis, with transparent reporting that facilitates accountability.
“A more systematic approach to policy adjustments, and the integration of a clear governance structure into the Reserve Bank Act, including potentially a new decision-making Financial Policy Committee, should assist in putting macro-prudential policy on a sound footing for the future.”
30 Apr 2018 Environment
30 April 2018 Minister for Biosecurity Damien O’Connor launched Biosecurity New Zealand at the Zealandia... more
30 Apr 2018 News
30 April 2018 Auckland Council is to be congratulated for this afternoon voting 15-2 in favour of the regional fuel tax, Transport... more
30 Apr 2018 Business News
30 April 2018 Customs Minister Meka Whaitiri today welcomed the signing of a partnership between New Zealand Customs and dairy... more
30 May 2018 Arts
Indie-pop trio nomad have left New Zealand behind to tour internationally for the first time. NZNewsUK London Editor Charlotte Everett... more
12 Feb 2018 Property
MONDAY, FEBRUARY 12, 2018 The Government's housing stocktake report released today adds no new knowledge or... more
12 Feb 2018 Property
12 FEBRUARY 2018 An independent stocktake of New Zealand’s housing sector has found the housing crisis the country faces is deeper... more
26 Jan 2018 Migration
26 JANUARY 2018 Immigration Minister Iain Lees-Galloway has today announced the four community-based organisations who will be the... more
22 Feb 2018 Travel & Tourism
International visitor spending reached a record high of $10.6 billion in the year to December 2017, Tourism Minister Kelvin Davis... more
28 Aug 2017 Travel & Tourism
Tourism fund for infrastructure and conservation Posted by Kris Faafoi on August 28, 2017 Labour will estaba Tourism and... more
13 Mar 2018 Rugby
12 March 2018 France's upset victory over England in the Six Nations at the weekend was the perfect result for the All... more
22 Feb 2018 Sport
New Zealand has tripled its Olympic Winter Games medal count in a single stunning afternoon at PyeongChang 2018. Zoi... more
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade First published on Werewolf The ghastly likes of Marine Le Pen in France and Geert ... more
30 Apr 2018 Appointments
30 April 2018 Health Minister Dr David Clark has announced new chairs to lead Auckland’s three District Health Boards. The... more
8 Mar 2018 Recruitment
8 MARCH 2018 Minister of Employment Willie Jackson today visited the Auckland CBD Jobs and Skills Hub and the Southern Initiative in... more