“New Zealand’s economy is expanding but there are headwinds and many uncertainties around the outlooks,” Reserve Bank governor Graeme Wheeler said. “New Zealand’s financial systems remain sound and well-placed to support economic expansion but rapid increases in house prices and low dairy sector incomes pose financial stability risks.”
Mr Wheeler’s comments came in the bank’s latest Statement of Intent, which outlines its priorities and initiatives for the next three years.
These include enhancing its policy frameworks, continuing to strengthen internal and external engagement, improving infrastructure and reducing enterprise risk.
Mr Wheeler said the RBNZ was positioning itself to meet the challenges posed by the economic and financial environment.
He said the bank was working to deepen its understanding of the current drivers of low inflation and the consequences for the economy and monetary policy.
The RBNZ is tasked with keeping inflation within a 1 per cent to 3 per cent target range on average over the medium term. It currently sits at 0.4 per cent.
“Inflation has remained below the target band of 1-3 per cent during 2015 — driven by an elevated exchange rate, falls in oil prices and spare capacity in the global economy. Stronger-than-expected growth in labour supply has also contributed to lower inflation,” the RBNZ said.
Source: TheAustralian
Link: http://www.theaustralian.com.au/business/economics/dairy-and-housing-prices-a-risk-to-nz-stability-rbnz/news-story/943d84ea3e2906b3a2ced1f48dbe90ff