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New Zealand Proposes Adding House Prices to Central Bank Remit

  • Investors reduce bets on further RBNZ interest-rate cuts
  • Orr says central bank already takes house prices into account
General Economy in Auckland As New Zealand Publishes Pre-election Economic and Fiscal Update Ahead of GDP Figures
Photographer: Brendon O'Hagan/Bloomberg
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New Zealand’s government has proposed adding house prices to the central bank’s remit to rein in an overheating property market, prompting investors to reduce bets on lower interest rates. The local dollar jumped.

Finance Minister Grant Robertson said Tuesday he has written to Reserve Bank Governor Adrian Orr, asking him to consider amending the bank’s remit to include stability in house prices as a factor for monetary policy. He said the government wants to make the changes soon, “so I would request that you gave it your earliest possible consideration.”

“With an extended period of low interest rates, and some time before housing supply can catch up with demand, now is the time to consider how the Reserve Bank may contribute to a stable housing market,” Robertson said. “I want to be clear I am not proposing any changes to the mandate or the independence of the Reserve Bank.”