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New Zealand Government Forces Central Bank to Include Housing In Rate Setting

  • Monetary Policy Committee remit to change from March 1
  • Kiwi dollar rises as investors see less scope for loose policy
Houses under construction in the Churton Park suburb of Wellington, New Zealand.

Houses under construction in the Churton Park suburb of Wellington, New Zealand.

Photographer: Mark Coote/Bloomberg
Updated on

New Zealand’s government will require the central bank to take account of rampant house prices when it sets interest rates, a change that may restrict its ability to run loose monetary policy.

The Reserve Bank’s remit will be amended so that the bank considers “the impact on housing when making monetary and financial policy decisions,” Finance Minister Grant Robertson said in a statement Thursday in Wellington. The New Zealand dollar jumped to its highest since 2017 as investors ramped up bets on higher interest rates.