- Reserve Bank of New Zealand
The Reserve Bank of New Zealand said the risks to New Zealand's financial system have intensified in the past six months. Its latest Financial Stability Report marked slowing global growth, low dairy prices and rising house prices as risks. RBNZ Governor Graeme Wheeler says the outlook for the global economy has "deteriorated" in recent months. Lower interest rates and low oil prices have not been enough to counter a slowdown in the economies of a number of New Zealand's trading partners.
The RBNZ held off from broadening measures to cool New Zealand's housing market or help the embattled dairy sector, even though the RBNZ was concerned that house prices were now starting to rise "strongly" in a number of regions across the country. The RBNZ has little control over increasing housing supply, yet the central bank has boosted fresh demand for housing by cutting interest rates to record low levels in an attempt to support consumer-price inflation. In March the Official Cash Rate was trimmed 25 basis points to 2.25%, and most economists agree that the weak inflation outlook means further easing is on the cards. Some economists predict that the OCR will be lowered to as low as 1.75% in the foreseeable future.
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