Morgan Stanley’s chief global strategist wrote an article in the Financial Times (republished in The AFR) suggesting New Zealand Prime Minister, Jacinda Ardern, is a revolutionary for ordering the Reserve Bank of New Zealand (RBNZ) to add stabilising home prices to its remit:
Housing bubbles are the worst… When prices fall, it can take years to clean up failed mortgages, drawing out a recession. In general, recessions that follow debt-fuelled housing booms are the longest and deepest.
Ardern’s move may not slow the housing boom… But ordering the central bank to make housing price stability a higher priority is a start, and could inspire others to rethink the role easy money has played in driving financial instability…
