RBNZ: Willingness to cut the OCR could be limited in the short term - TDS

Research Team at TDS, notes that the RBNZ released its Semi-Annual Financial Stability Report this morning.

Key Quotes

“As expected the Bank said financial stability risks have increased in housing and the dairy sectors, but most attention was on whether the Bank would announce macro-prudential polices to slow the booming housing market. On that front the Bank said, “It’s fair to say we’re seriously looking at macro-prudential policies”, but the Bank did state that there was no specific timing on new measures.

The Bank said that further limits on loan-to-value ratios were an option as were restriction on debt-t-income levels, but this measure would need the RBNZ to include this into its MOU with the government. As for the dairy sector, the Bank said that problem loan levels are expected to increase significantly over the coming year. Net takeaway from today’s result, the Bank’s willingness to cut the OCR could be limited in the short term."