Bank expects action on the housing boom this year
They say credit growth won’t need to get anywhere near the levels of the last housing boom before the Reserve Bank starts reaching for macroprudential tools to counter it
ASB chief economist Nick Tuffley said the Reserve Bank would become less tolerant of the house price momentum building in Auckland and Christchurch, which is showing signs of spreading to other parts of the country. He said it posed a risk to both monetary and financial stability.
The macroprudential tools the bank is developing would be a way to ease the property market pressure without dampening other parts of the economy, which are already struggling. Q3 GDP figures were low compared to expectations and economic growth has proved to be weaker than predicted.
Tuffley said that weak growth would make Wheeler reluctant to raise the official cash rate until the end of this year at the earliest.
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