COMMENT: RBNZ is still capable of producing worthwhile research
Saturday, August 26th 2023, 4:27PM
Jenny Ruth's Just the Business! I’m so used to seeing sloppy and ill-thought-out analysis coming out of the Reserve Bank these days that I confess when a paper on housing landed in April, I went looking for faults.
Like the time when RBNZ said it needed to focus on climate change as part of its role in ensuring financial stability because mortgages are of such long duration.
But its own data showed mortgages reprice in about three or four years while insurance reprices every year.
And RBNZ tried its darndest to suppress a paper one of its staff wrote in 2018 that found climate change posed little threat to financial stability because of such repricing.
And another paper on house price inflation a while back didn't mention the impact of monetary policy.
Because among the myriad factors that influence house prices, interest rate levels are one of, if not the major influence.
As is employment – even if house prices fall so much that a recent home buyer is staring at negative equity, if they still have a job and income, the means to pay their mortgage, they usually sweat it out until house prices recover.
The April paper by Andrew Coleman was of much higher calibre and focused squarely on the role of interest rates, as well as many other factors.
[READ ON]
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