Public not listening to us: RBNZ
The Reserve Bank says although it is trying to be more open about what it is doing and its views on future interest rates many people aren't listening.
Friday, December 6th 2013, 10:03PM 
4 Comments
Deputy Geoff Bascand told a meeting in Auckland that understanding of, and confidence in the Bank’s actions and messages – and the institution itself – was essential.
He said sometimes what the Bank said about what it was going to do in terms of monetary policy was almost as effective as what it did do.
“In this context, statements and analysis by the Bank are designed to inform and shape expectations about future monetary policy settings. Indeed, when used in this instrumental manner, the words of the central bank are themselves monetary policy actions."
He said: “The communication challenge with forward guidance – which equally applies to publishing interest rate projections – is how to reduce uncertainty about the likely path of policy while at the same time conveying its conditionality and the possibility of change in policy settings…Achieving this depends crucially on the private sector believing the bank’s unwavering commitment to the inflation target.”
But it had become clear that not all interested parties always had the same understanding of what the bank meant, he said.
The bank has not been shy about likely interest rate rises next year. But Bascand said there still seemed to be significant surprise when an opinion column spelt them out recently.
“A recent foray into the ‘public audience’ via an opinion article explaining the LVR policy, that repeated our monetary policy expectations, appeared to reveal substantial public surprise about our interest rate projections,” he said. “While unintentional, it therefore possibly enhanced the projection’s impact.”
Bascand said: “We have reiterated that LVRs are targeted at the primary objective of financial stability, but that there is also a potential benefit for monetary policy if they reduce the spillover of house price inflation into stronger consumer demand and higher price inflation for goods and services. Explaining important inter-dependencies with other policies – our own or wider government ones – is vital.”
So far this year bank staff have given 17 on-the-record speeches, eight more than last year, and 90 off-the-record addresses. That is on top of the six-weekly official cash rate and quarterly Monetary Policy Statements.
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Comments from our readers
Neither of which have occurRed. Of course we will be surprised if they, contrary to past action, actually act on these warnings.
The population by necessity has to consider longer time frames on decisions they make. Particularly issues of long term borrowing and long term saving and investing.
By the very nature of the time frames, these objectives have conflicts.
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The statistics about foreign investment having minimal impact are ridiculously skewed. Very few foreign investors they say - sure that's correct - but HOW many properties do rich offshore investors have EACH?
They base statistics off the number of investors, not the number of properties each investor has.
I've heard first hand from agents of investors taken around Auckland on coaches buying over 100 properties in one go. A search on property guru (especially in South Auckland rental areas) confirms a lot of overseas ownership.
Why not do what plenty of other countries have done - if foreigners want to invest, they only have the option of:
1. building NEW if their intention is to rent the property and
2. they can ONLY buy a 2nd hand dwelling IF they live in it themselves.
These 2 simple things will help boost our economy - it helps towards the housing shortage (economics 101, supply and demand) and it helps towards employment for tradesman.
The RBNZ are too high up the food chain to understand what is going on at a true housing level. Ask any serious investor, estate agent or anyone else in the property business at the ground level and I guarantee they will give you a number of other BETTER and SIMPLE solutions to help stagnate the escalating house market prices.