The RBNZ’s Big Experiment

• LVR rule-change imposition just days away
• RBNZ apparently overly focused on “overvalued” housing market
• Monetary and prudential tools and objectives are being confused
• RBNZ credibility at risk
• Monetary orthodoxy must not be overlooked

The Reserve Bank is about to embark on the biggest central bank experiment seen in New Zealand in decades. The introduction of speed limits on high loan to value ratio loans is a gamble designed to slow down the pace of house price inflation in order to reduce the banking sector’s vulnerability to a future house price correction.

Read the full report: Market Research



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