The Reserve Bank of New Zealand’s (RBNZ) Governor Adrian Orr said on Friday that adding house prices to its remit would make moentary policy less effective and impact financial market efficiency, according to Reuters.
Finance Minister Grant Robertson last month asked the RBNZ to take steps to rein in a surge in home prices driven by record low interest rates and expansionary fiscal policy. Orr, however, believes the proposal, if implemented, could have negative trade-offs, particularly on the government’s goals of housing New Zealanders, and reducing inequality.
Orr added that raising interest rates to counter the housing market bubble would lead to lower employment.
Orr’s comments haven’t had any impact on the NZD/USD. The currency pair is currently trading at 0.7105, having hit a high of 0.7113 a few minutes ago.
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