The Reserve Bank of New Zealand’s half- yearly Financial Stability Report is due out Wednesday (12 November 2014) New Zealand time, followed by Governor Wheeler speaking at a news conference and then before a parliamentary committee. Here’s a bit of preview of what we could reasonably expect.
- The Financial Stability Report is due at 2000GMT on Tuesday , 11 November 2014, which is 9am (Wednesday) New Zealand local time.
- Governor Wheeler’s press conference begins 5 minutes later at 2005GMT (9.05am New Zealand time)
- Wheeler then rushes over to parliament (actually dragged reluctantly by underlings hired specifically for this purpose … these big guys work as bouncers on the weekend, so Wheeler isn’t gonna argue with them) for a 2110GMT start (10.10am NZ time – plenty of time for Wheeler to get in a few tequila slammers before fronting the
grandstanding, axe-grinding fu…elected representatives)
OK. So, what to expect from the Financial Stability Report? (main points via Westpac):
- The RBNZ has said it will take the opportunity to review the mortgage lending restrictions it put in place last year
- WPAC wouldn’t be surprised if it set out a plan for their removal, the only real question being at what pace
- On most relevant metrics the impact of the LVR restrictions has met or exceeded expectations (house price inflation has moderated, housing credit is growing at its slowest pace since early 2013; new high-LVR home loans written by banks remains safely below the Reserve Bank’s stipulated speed limit, and on our estimates the high-LVR share of the total stock of mortgage loans is back to the post-recession lows seen in 2010
- While monetary policy won’t be the Reserve Bank’s main concern in this context, surely the fact that inflation is at the bottom of the target band won’t be entirely irrelevant
The questions are:
- Whether the RBNZ will give a firm or conditional timetable for removal of LVRs
- Whether it will be loosened initially or removed all at once
