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Robertson's letter to Reserve Bank dismissed as 'political theatre'

Author
Newstalk ZB,
Publish Date
Tue, 24 Nov 2020, 6:46PM
(Photo / 123RF)
(Photo / 123RF)

Robertson's letter to Reserve Bank dismissed as 'political theatre'

Author
Newstalk ZB,
Publish Date
Tue, 24 Nov 2020, 6:46PM

The Finance Minister's making moves to put an ice pack on the overheated housing market.

Grant Robertson's written to Reserve Bank Governor Adrian Orr to look at ways they could work together.

In a letter - Robertson's suggested Orr add stability in house prices to the Reserve Bank's remit.

He says economists across the board were not projecting this scale of house price rise.

Robertson says nobody can pretend to have all the answers straight away - and it's now all hands to the pump.

He says the Government's set to review housing settings to improve access to the market.

However, former Reserve Bank governor Michael Reddell says that this won't make a difference at all.

He told Heather du Plessis-Allan that the amended document would still read that the prime job is to reduce inflation and unemployment, and to avoid instability in output, interest rates and exchange rates - with house prices added to that list. 

"Those other three things have been there for 20 years. People at the Reserve Bank never knew quite what it meant, and it never made much different to monetary policy."

Reddell says that interest rates have been cut due to inflation and unemployment, and increasing interest rates would push up unemployment. 

"They are just not going to do it." 

He says that this is "mostly political theatre". 

The Reserve Bank says it'll provide feedback on Robertson's housing letter in due course.

Governor Adrian Orr says they'll consider how the Monetary Policy Committee could further take house prices into account.

He's reassured Robertson the committee already considers the potential impact of monetary policy on assets - including house prices.

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