Tag Archives: Central Bank / Central Bank Events

New Zealand

NZ cenbank will tighten its mortgage lending as the outlook for negative interest rates dims | Instant News


WELLINGTON (Reuters) – New Zealand’s central bank said Wednesday it will reimpose mortgage restrictions next year and is working with the government to fix the housing crisis, reinforcing the view that deeper interest-rate cuts into negative territory are now unlikely.

FILE PHOTOS: A security guard stands at the main entrance to the Reserve Bank of New Zealand located in central Wellington, New Zealand, July 3, 2017. Image taken July 3, 2017. REUTERS / David Gray

The government on Tuesday sent a letter to the Reserve Bank of New Zealand (RBNZ) asking it to consider factoring property prices as part of its policy amid widespread concerns about housing affordability.

RBNZ governor Adrian Orr said the central bank would consider the government’s proposal but needed to assess the impact of such changes on its goal of maintaining financial stability.

“We intend to work with the government in a prompt, constructive and open manner in assessing long-term solutions to housing affordability,” Orr told a news conference.

His comments came when the RBNZ announced plans to reimpose mortgage lending restrictions, called loan-to-value (LVR) restrictions, in March next year.

New Zealand bounced back sooner than expected from recession, but house prices have hit new highs prompting a government proposal to the central bank to include house prices in its monetary policy jurisdiction.

The New Zealand dollar surged to its highest level since mid-2018 on Tuesday, as a government letter was seen by markets as reinforcing expectations the central bank will refuse to move towards negative interest rates.

“Given the news flow, the chances are increasing that the RBNZ will not accept a negative OCR …,” ANZ Bank Chief Economist Sharon Zollner said in a note.

When asked about negative rates, Orr said the RBNZ was operationally ready to implement them, if needed.

The RBNZ pumped NZ $ 28 billion into the banking system this month raising concerns that this will further inflame housing prices already heating up due to historically low interest rates.

Orr defended the bank’s move to stimulate the economy, saying housing has been a longstanding issue for policymakers, but the alternative is rising unemployment and more uncertainty as COVID-19 continues to affect the economy globally.

“The economy has proven to be one of the most resilient on planet earth. So it’s a fantastic result, “said Orr.

(This story corrects irrelevant words in the title)

Reporting by Praveen Menon; Edited by Tom Brown and Sam Holmes

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New Zealand

UPDATE, 3-NZ government asks cenbank to include red-hot housing that tames, NZ $ jump | Instant News


* NZ fin min sends letter to RBNZ governor regarding housing crisis

* The proposal includes housing in the RBNZ remit

* Says high house prices lead to financial stability risks (Added RBNZ Governor response and analyst comments)

WELLINGTON, Nov 24 (Reuters) – The New Zealand government has asked the central bank to consider factoring house prices as part of its monetary policy, Finance Minister Grant Robertson said, increasing the local dollar on market bets of less stimulus over the next year. .

As policymakers grapple with soaring house prices and the risk of a property bubble, Robertson said the government is reviewing housing policies, and has written to the Reserve Bank of New Zealand (RBNZ) asking what it can do to help slow the property boom.

He proposes to take house prices into account when formulating monetary policy, along with the bank’s existing inflation mandate and maximum employment.

“I think this move threatens bank independence and questions what areas the Reserve Bank needs to focus on right now,” said Brad Olsen, a senior economist at Wellington-based economic consulting firm Infometrics.

The New Zealand dollar surged to $ 0.6985, the highest since mid-2018, as the government’s move is seen as bolstering expectations the central bank will refuse to move towards negative interest rates next year.

“I am concerned that the recent rapid rise in house prices, and the forecast for them to continue, will affect the government’s ability to meet the economic goals set out under the authority,” the finance minister said in a letter to RBNZ Governor Adrian Orr.

In response, Orr said the bank would consider the suggestion, but added that monetary policy and financial regulation alone cannot solve the problem because there are “long-term structural problems” affecting housing affordability.

MARKET TOO HOT?

Historically low interest rates, along with other monetary and fiscal stimulus to support the pandemic-hit economy have inflated the New Zealand housing market, misguided many economists who forecast a slowdown after years of rising prices.

Robertson’s letter comes amid mounting pressure to contain a booming property market – home values ​​have surged by about 90% in the last decade – and calls from opposition parties to ‘rein’ the central bank.

While the RBNZ is pumping another NZ $ 28 billion into the banking system this month, raising fears this will further inflame house prices, it is also considering reintroducing restrictions on mortgage lending that took off after COVID-19 slowed economic activity.

“With an extended period of low interest rates, and some time before housing supply can catch up with demand, now is the time to consider how the Reserve Bank can contribute to a stable housing market,” said Robertson. (Reporting by Praveen Menon; Editing by Kim Coghill & Shri Navaratnam)

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New Zealand

UPDATE, 3-NZ government asks cenbank to include red-hot housing that tames, NZ $ jump | Instant News


* NZ fin min sends letter to RBNZ governor regarding housing crisis

* The proposal includes housing in the RBNZ remit

* Says high house prices lead to financial stability risks (Added RBNZ Governor response and analyst comments)

WELLINGTON, Nov 24 (Reuters) – The New Zealand government has asked the central bank to consider factoring house prices as part of its monetary policy, Finance Minister Grant Robertson said, increasing the local dollar on market bets of less stimulus over the next year. .

As policymakers grapple with soaring house prices and the risk of a property bubble, Robertson said the government is reviewing housing policies, and has written to the Reserve Bank of New Zealand (RBNZ) asking what it can do to help slow the property boom.

He proposes to take house prices into account when formulating monetary policy, along with the bank’s existing inflation mandate and maximum employment.

“I think this move threatens bank independence and questions what areas the Reserve Bank needs to focus on right now,” said Brad Olsen, a senior economist at Wellington-based economic consulting firm Infometrics.

The New Zealand dollar surged to $ 0.6985, the highest since mid-2018, as the government’s move is seen as bolstering expectations the central bank will refuse to move towards negative interest rates next year.

“I am concerned that the recent rapid rise in house prices, and the forecast for them to continue, will affect the government’s ability to meet the economic goals set out under the authority,” the finance minister said in a letter to RBNZ Governor Adrian Orr.

In response, Orr said the bank would consider the suggestion, but added that monetary policy and financial regulation alone cannot solve the problem because there are “long-term structural problems” affecting housing affordability.

MARKET TOO HOT?

Historically low interest rates, along with other monetary and fiscal stimulus to support the pandemic-hit economy have inflated the New Zealand housing market, misguided many economists who forecast a slowdown after years of rising prices.

Robertson’s letter comes amid mounting pressure to contain a booming property market – home values ​​have surged by about 90% in the last decade – and calls from opposition parties to ‘rein’ the central bank.

While the RBNZ is pumping another NZ $ 28 billion into the banking system this month, raising fears this will further inflame house prices, it is also considering reintroducing restrictions on mortgage lending that took off after COVID-19 slowed economic activity.

“With an extended period of low interest rates, and some time before housing supply can catch up with demand, now is the time to consider how the Reserve Bank can contribute to a stable housing market,” said Robertson. (Reporting by Praveen Menon; Editing by Kim Coghill & Shri Navaratnam)

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Brazil

UPDATE 1-The Brazilian economy minister said the real slump overshot, said the rate should be close to 5.00 / dollar | Instant News


(New throughout, adding details, background and comments)

BRASILIA, Nov 23 (Reuters) – Brazilian real, which hit a record low in May and fell 30% against the dollar this year, has crossed the line, Economy Minister Paulo Guedes said on Monday, pegging its equilibrium level to near 5.00 per dollar.

In an online event hosted by financial research firm Empiricus and fintech Vitreo, Guedes said the treasury would have no problem rolling out more than 600 billion reais of debt in the first four months of next year, half of which was sourced.

Guedes reiterated his view that Brazil’s policy mix is ​​one of low interest rates and a weak exchange rate, the opposite of what was under the previous administration when interest rates exceeded 10% and real was as strong as 2.00 per dollar.

“The economy is much healthier with an interest rate of around 2% and an exchange rate of 5.00 … that’s much better. The exchange rate even exceeds, “said Guedes.

“When you change the equilibrium level (between the interest rate and the exchange rate), you get a big move past the equilibrium level and then back again. I think we have crossed the line, if we make progress with reforms, “said Guedes.

In May, the real value weakened to nearly 6.00 per dollar, and on Monday ended trading around 5.45 per dollar. Guedes and central bank officials said the weak exchange rate was a natural consequence of interest rates being cut to a record low of 2.00%.

The central bank has intervened to sell billions of dollars in the spot and derivatives markets this year to slow real declines. Guedes also said on Monday that a weak currency boosted exports and low interest rates sparked a construction boom.

In his broad remarks, Guedes also said he did not “see any problem with this government (refinancing),” adding “we don’t think we are in a dramatic situation.”

He said 300 billion reais of the 600 billion reais to be refinanced in Jan-April were covered. He pointed to 200 billion reais of central bank cash transferred to treasurers and more than 100 billion from deleveraging of public banks.

$ 1 = 5.45 reais Reporting by Jamie McGeever and Marcela Ayres; Edited by David Gregorio

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Australia

Cenbank Australia said bond purchases sought to hold A $ in check | Instant News


SYDNEY, 24 Nov (Reuters) – The Reserve Bank of Australia’s (RBA) latest policy easing has managed to hold back the local currency, a leading central bank governor said on Tuesday, while also warning against removing stimulus too soon.

Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle said cutting official interest rates and buying government bonds had lowered borrowing costs across the economy and boosted income for most households.

Historically low interest rates have also made it easier for the government to finance massive fiscal stimulus, Debelle said, adding that the level of debt was “really sustainable”.

Debelle said the RBA’s decision to buy A $ 100 billion ($ 72.98 billion) of six-month longer-dated bonds was needed because Australia’s 10-year yields were above peer peers, putting unwanted upward pressure on the Aussie dollar. .

“This package has materially lowered the interest rate structure in the Australian financial system,” he said in a speech to Australian business economists.

“A reduction in interest rates across the yield curve has lowered the exchange rate, relative to what’s going to happen.”

Debelle hopes the positive news about a potential vaccine for the coronavirus will help boost confidence in the economy, although she noted it will take time for the vaccine to become widely available and distributed.

With any recovery likely to be sluggish, he argued it was best “to be careful about removing stimulus too early.”

$ 1 = 1.3702 Australian dollars Report by Wayne Cole; Edited by Kim Coghill

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