Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler expects consumer inflation to move back within its target range as soon as December, a sign that record low interest rates were beginning to have their desired effect.
Wellington’s official consumer price index (CPI) edged up only 0.2% in the third quarter, following a 0.4% rise the previous period. The Reserve Bank didn’t hesitate to ease monetary policy even further earlier in response, lowering the Official Cash Rate by 25 basis points to 1.5% at the November 10 policy meeting.
Wheeler delivered the remarks in prepared testimony to the Parliament Select Committee in Wellington. His comments came one after the RBNZ issued its biannual Financial Stability Report, which highlighted growing concerns surrounding the nation’s housing sector. The RBNZ praised the new lending restrictions on property investors with high loan-to-value ratios, a move that helped improve the resilience of domestic banks.
The report also indicated that while New Zealand’s financial system is sound, it continues to face risks.
Wheeler’s testimony had no immediate impact on the financial markets. The New Zealand dollar was also trading steady after completing its third consecutive daily advance against the US dollar. The New Zealand dollar was last seen trading at 0.7140 US.