New Zeland Government Forces Central Bank to Include Housing In Rate Setting

(Bloomberg) -- New Zealand’s central bank will be required to take the housing market into account when it sets monetary policy, Finance Minister Grant Robertson said.

“The Reserve Bank is now required to consider the impact on housing when making monetary and financial policy decisions,” Robertson said in a statement Thursday in Wellington. “Changes have been made to the bank’s Monetary Policy Committee’s remit requiring it to take into account government policy relating to more sustainable house prices, while working towards its objectives.”

The RBNZ opposed the government’s proposal, first aired in December, to include housing in its policy remit. The move comes as the government seeks to cool the rampant housing market.

“The Committee retains autonomy over whether and how its decisions take account of potential housing consequences, but it will need to explain regularly how it has sought to assess the impacts on housing outcomes,” Robertson said.

A direction has also been issued to the Reserve Bank requiring it to have regard to government policy on housing in relation to its financial policy functions.

Robertson said the RBNZ’s objectives and mandate remain the same, which is to maintain price stability, support full employment and promote a sound and stable financial system.

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