Not that it matters any more given the Glenn Greenspan boom and bust agenda, but the RBNZ has made the following point. Via Banking Day:
The Reserve Bank of New Zealand has estimated its ‘speed limit’ on low deposit mortgages in October reduced inflation pressures by an amount similar to the impact of a 25 to 50 basis point increase in the Official Cash Rate.
Deputy Governor Grant Spencer gave the fresh estimate in a speech to the Credit Suisse Asian Investment Conference in Hong Kong, where he outlined how the bank was coordinating the macro-prudential tool with its monetary policy. He also gave a more detailed indication of the conditions needed for the limit to be relaxed or removed.
…”They have also been an important consideration in the Reserve Bank’s monetary policy assessment. The dampening effect of LVRs on house price inflation is estimated to have reduced CPI inflation pressures by an amount equivalent to a 25 to 50 basis point increase in the OCR,” Spencer said, adding it had reduced upward pressure on the New Zealand dollar.
It’s not entirely fair to reverse engineer this for Australia but it’s not ridiculous either. Apply macroprudential and cut rates 50 basis points, sit back and enjoy a neutral to gently dampening effect on the housing market as the dollar plunges and tradables recovery surges.
We’ll never know.
