RBNZ holds OCR at 2.5% as expected, but warns it is watching house price inflation and credit growth closely

The NZ dollar firmed strongly following today's RBNZ OCR review.

By Bernard Hickey

The Reserve Bank of New Zealand has held the Official Cash Rate (OCR) at 2.5% as expected and given no guidance on when or in what direction it might next move the OCR.

Economists expect the OCR will remain on hold at its record low until the end of 2013 or early 2014, before rising to around 4-5% in the following couple of years. The Reserve Bank itself forecast at its last full Monetary Policy Statement (MPS) on December 6 it expected the 90 day bill rate (a proxy for the OCR) to start rising from the March quarter of 2014 and rise around half a percentage point by early 2015.

However, new Reserve Bank Governor Graeme Wheeler noted that house price inflation had increased and the bank was watching both house prices and household credit growth closely. He also said the New Zealand dollar was over-valued and hitting exporters. But he gave no guidance on what the Reserve Bank would do if housing inflation rose too high or the New Zealand dollar rose too high. He has previously indicated he is relucant to intervene to bring the currency lower and that even if he had alternative so-called 'macro-prudential tools' to control house price inflation he didn't think they should be used just yet.

"The bank does not want to see financial stability or inflation risks accentuated by housing demand getting too far ahead of supply," Wheeler said in a statement on the bank's monetary policy decision, which is made every six weeks or so. He said in his November Financial Stability report that house price inflation was not so high that the bank needed to intervene with macro-prudential tools such as loan to value ratio limits on mortgage lending.

The bank said inflation remained subdued and was currently below the bottom of the Reserve Bank's inflation target range.

"This mainly reflects the impact of the overvalued New Zealand dollar. The high currency is directly suppressing inflation on traded goods, and is undermining profitability in export and import competing industries. At the same time, the labour market remains weak and fiscal consolidation is dampening growth."

The New Zealand dollar rose round half a cent to around 83.6 USc in the first hour of trade after the 9 am announcement of the decision. Wholesale interest rates rose around 2-3 basis points.

The bank also noted lower bank funding costs and that retail interest rates for households and firms had fallen somewhat.

The bank made no comment about its potential use of macro-prudential tools such as loan to value ratio (LVR) limits. The bank plans to issue a discussion paper by the end of March on the potential use, targets and governance for these tools.

Elsewhere, the bank said global growth was set to recover in 2013 with economic indicators improving in many of New Zealand's trading partners.

"Consistent with this, global financial market sentiment is positive, contributing to lower bank funding costs and some reduction in interest rates faced by households and firms," Wheeler said.

"Domestically, recent data on business confidence and construction activity suggest GDP growth is recovering from the softness seen through the middle of last year. The Canterbury rebuild is gathering momentum and its impact will be felt more broadly in incomes and domestic demand," he said.

"House price inflation has increased and we are watching this and household credit growth closely," it said.

The bank said the high New Zealand dollar wa directly suppressing inflation on traded goods and was hitting profitability in the traded sector. It made no comment about its preferred level for the currency or what it would do to contain the currency. Yesterday the Reserve Bank disclosed it had sold around a quarter of a billion New Zealand dollars in November and December, the biggest sale since its more overt intervention back in 2007 and 2008. See more here in David Chaston's article.

"At the same time, the labour market remains weak and fiscal consolidation is dampening growth."

"Overall, we expect economic growth to strengthen over the coming year, reducing spare capacity and bringing inflation slowly back towards the 2 percent target midpoint. On balance, it remains appropriate for the OCR to be held at 2.5%."

Economist reaction

ASB Economist Nick Tuffley said the statement was reasonably balanced and had a more 'upbeat tone' on the international economic outlook.

We expect the RBNZ to remain on hold until March 2014, given the weak starting point for inflation pressures and that inflation is likely to remain in the bottom half of the target band for another 18 months. The statement does suggest recent housing market developments and credit growth are pushing the RBNZ out of its comfort zone, and that tension will build over the course of this year. We see the risks around our call as balanced. Although the OCR is the most effective tool for dealing with housing and credit, we see a small (and growing) possibility that the RBNZ uses macro-prudential tools if the divergence between housing/credit and broader inflation pressures remains wide.

Westpac Economist Dominick Stephens described the statement as slightly more hawkish than the markets expected.

The RBNZ delivered a slightly more hawkish OCR review than we or markets expected. Two-year swap rates rose 3bp and the NZD rose nearly half a cent. The central bank has shifted slightly in the direction of our long-held views that rising house prices and the Canterbury rebuild will provoke inflation pressure. the really hawkish part of this OCR review was the interpretation of the housing market situation: "House price inflation has increased and we are watching this and household credit growth closely. The Bank does not want to see financial stability or inflation risks accentuated by housing demand getting too far ahead of supply."

The Reserve Bank is now expressing concern that rising house prices are set to unbalance the economy and could provoke inflation pressure (something we agree with strongly).

The reference to financial stability was a direct invocation of the RBNZ's new Policy Targets Agreement. The RBNZ is reminding markets that it has the right to keep interest rates higher than inflation targeting alone would warrant, in order to prevent excessive lending from imperilling financial stability.

We welcome the RBNZ's slight change in view. Our key view over the past year has been that so long as interest rates remain low, house prices would rise aggressively. We have long expressed concern about the potential for rising house prices to unbalance the economy. And we have long been concerned that the Canterbury rebuild would provoke inflation pressure, necessitating higher interest rates.

We continue to forecast an OCR hiking cycle that begins in December 2013 and extends far further than markets are currently pricing. The market was poised for a slightly dovish outcome, hence the initial reactions: 3bp higher in the 2yr swap yield and a 45 pip rise in the NZD/USD exchange rate.

ANZ's Economist Mark Smith described the statement as 'business as usual', but noted the Reserve Bank seemed closer to using its prudential tools.

Business as usual for the RBNZ, with mixed economic nuances keeping the central bank focused on its bread and butter – namely OCR settings aimed at delivering future inflation close to the target midpoint. There are the obvious warning shots (housing), watch factors (credit growth), and hooks (a weak labour market).

We note the explicit reference to financial stability within the text, which on the face of it flags that we may be somewhat closer to the inevitable turn to prudential policy: you’d typically keep financial stability and monetary policy distinct, though they do overlap. All up, there seemed more positive nuances, though this is now manifesting in tighter financial conditions, with the NZD lifting.

We maintain our view that the next move in the OCR is up, but that OCR hikes are a long way off (2014).

Harbour Asset Management's Christian Hawkesby said the Reserve Bank seemed to have resumed 'open mouth operations'.

What we learnt today is that, in the meantime, the new Governor is not afraid of attempting to implement policy through ‘Open Mouth Operations’ targeted at the NZD dollar and NZ house prices. Traditionally central banks have moved interest rates and exchange rate using so-called ‘Open Markets Operations’ (OMOs), injecting or withdrawing liquidity from the market. The term ‘Open Mouth Operations’ was coined by a couple of top New Zealand economists in the 1990s to explain how central banks deliberately talk asset prices up or down.

We saw this strategy in action today, applied to the NZ dollar and NZ house prices. After previous attempts to talk down the currency through 2012, the RBNZ had remained relatively silent in recent Monetary Policy Statements and OCR reviews. That changed today with an explicit reference to “the high currency... undermining profitability in export and import competing industries.”

This comes closely on the heels of the disclosure yesterday that the RBNZ sold NZ$250m in the FX market in recent months. The RBNZ would clearly like to see the NZD lower.

There was also a comment that “the Bank does not want to see financial stability…risks accentuated by housing demand getting too far ahead of supply”. Outside of an acute financial crisis, it is extremely unusual for the Bank to refer to its financial stability objectives in a statement designed to explain its monetary policy decision.

We expect a framework for macro-prudential tools will be introduced this year, starting with a Memorandum of Understanding (MoU) with the NZ Treasury and public consultation in March. In the meantime, the RBNZ would clearly like to see the housing market cooling off.

For all the talk in today’s statement about the RBNZ’s preferences, the reality is that they left the OCR unchanged, and concluded that they project “(inflation to come) slowly back towards the 2 percent target” from its current decade low. We think today’s statement was designed to stop the market pricing in rate cuts. In our view, the prospects of a rate hike or introducing macro-prudential tools that actually bite are some way off.

BNZ's Stephen Toplis said the Reserve Bank now had a modest tightening bias and he saw the first OCR hike coming on December 12.

The Reserve Bank is getting increasingly worried about excess demand in the housing market and its implications for both monetary and prudential policy. The Bank could not be blunter than when it notes “house price inflation has increased and we are watching this and household credit growth closely”. In our opinion, the excesses in this market will build further.

Accordingly, this will keep the central bank firmly on a tightening bias resulting in an eventual increase in the cash rate later this year. It is important to note that not only is the Bank worried about the inflationary impact of an overheating housing market but it is also increasingly concerned by the risk that this poses to financial stability.

In short, it is believed that house prices are becoming increasingly overvalued and that in the event that they correct, to more sustainable levels, this might put pressure on bank balance sheets. It is for this reason that the Bank is, in consultation with New Zealand Treasury, investigating alternative methods of “controlling” the housing market. Of course, in the current environment, where a paucity of supply seems to be the driving force of the excess demand, it is highly unlikely that even prudential policy would contain the inflation that is building in the sector. Housing inflation, unto itself, may not be problematic for more generalised inflation but it will become so if households again start to leverage against the increased value of the housing stock. We think housing related issues will be the number one consideration to monitor over the course of 2013.

We will stick with our pick for the first rate hike in December of this year with the risks evenly weighted between sooner and later. At the same time, we think the probability that rates will remain unchanged in March is around 80%. If there was a surprise it is more likely to be to the upside than the down. This is a view that is now not dissimilar to the market with almost no chance of a change priced for the next meeting and a 20% chance of a rate hike by September. Market reaction to today’s statement suggests that it was a modest surprise on the hawkish side.

The NZD rose around half a cent against both the AUD and USD immediately after the OCR release. Given the combination of the RBNZ’s stance here and the ailing Australian economy, we believe there is a very real risk of substantial further appreciation in the NZD/AUD in the coming months. For the record, short-dated swaps (one to two years) also backed up around four basis points in recognition of the modest tightening bias.

Greens co-leader Russel Norman said the Reserve Bank had chosen ideology over jobs by not cutting the Official Cash Rate and by not using the alternative tools it had been investigating since May last year.

The Reserve Bank decision to keep the Official Cash Rate (OCR) unchanged today will hurt the productive economy and result in further job losses, the Green Party said today. In its statement today, the Reserve Bank admitted that inflation remained subdued and was below the bottom of the Bank’s inflation target range. The Bank also admitted that the overvalued currency is “undermining profitability in export and import competing industries”.

“By not cutting the OCR today, Graeme Wheeler is helping to wreck our export and manufacturing sectors and the valuable jobs they create,” Green Party Co-leader Dr Russel Norman said.

“A lower OCR would have taken pressure off our overvalued exchange rate, helping exporters and manufacturers who compete with imports. “Graeme Wheeler needs to roll up his sleeves and start fighting for New Zealand’s productive economy. “Simply talking about our overvalued dollar is no longer enough. In fact, the dollar rose even further after his announcement today.” Dr Norman today released a Reserve Bank paper that shows that the Bank has been discussing complementary tools to the OCR since at least May last year.

The Bank believes introducing loan-to-value ratios would reduce house price inflation.

“The Reserve Bank has known since at least the middle of last year that complementary tools, like loan-to-value ratios, could be used to control house price inflation which then give the Bank greater room to cut the OCR to help re-balance the economy and create jobs,” Dr Norman said. “The Reserve Bank can use the multiple tools at its disposal to control house price inflation while lowering interest rates to bring down the dollar and give exporters a break.

“Other central banks are following such smart policies, but New Zealand seems to have one of the most ideologically rigid central banks in the world, costing our economy exports and, most importantly, jobs.”

(Updated with detail from statement, NZ$ spike, link to currency 'intervention article', ASB, ANZ, BNZ and Westpac economists' reactions, Harbour Asset Management's comments, Greens comments background)

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Should have cut.
There are no inflation risks (outside of select Auckland housing suburbs)
How long do we wait for stimulus?
Try raising OCR   -   see how quickly the economy will crash land.

Nothing as usual and so it should be.
The market is best left to itself as interference always leads to distortions of even greater proportions than before.
The Loonie Lefties will have to suck it up and simply get on with it.

That's fine, but please lets have a level playing filed. Seeing as we now face world prices on our houses but not world incomes, lets take the foreign buyers out so that we then have a level playing field and the market can do its thing

This mainly reflects the impact of the overvalued New Zealand dollar. The high currency is directly suppressing inflation on traded goods, and is undermining profitability in export and import competing industries.
Which recognised price discovery mechanism says so? - witch doctors,shamans? Can he (Wheeler) sell me some NZD/USD on the cheap, under the table? How much of this utter nonsense do we have to endure?

"How much of this utter nonsense do we have to endure?"
A lot more as this OCR farce goes on and on every 6 weeks.  For the MSM this is a big story, whereas the reality is that it is a non-event. 

As far as house prices are concerned.
I hope those smart investors looking after Kiwisaver pumped millions of dollars into Auckland houses.
Expect to see 10%+ returns this year if they did

Hardening up on banks with a minimum LVR will only cut out those who need the homes.
It will not curtail any investors including second property locals or the cashed up overseas buyers.
That is not a RB job but it is for the Government to handle. Then again maybe we need a real government with ideas.

Notice all the shooting around the target since the issue of non-resident foreigners came to the fore the other day. Gawd, even Nick Smith is looking into lack of competition in the industry
They need to look at everything, all applying an LVR without breaks applied to foreign buyers will mean is even more foreign buyers.
The've got to look at the whole picture as you say, but you missed out on the other obvious one and that's the CGT on investment properties

Both good comments here and I have only oneproblem.
I will continue to batter my head against a brick wall by suggesting a Land or Asset tax and not CGT.
The reason is that CGT can only be collected on infrequent change of ownership while a Land Tax or similar comes at the owner/speculator each year and every year so with potential to enforce a cash flow impost. As most here know it is cash flow that embarasses before loss or profit in incurred.

Tiring isn't it BB3. Like going around the dance floor a million times. You will get battered-head-syndrome. People either don't really care, don't read, don't understand, or can't hoist it on board.

Kate summed up the politics of it pretty well yesterday.

Boom boom. That's me shooting down your idea for a Land/Asset Tax as opposed to a CGT. The idea behind the CGT is not so much to collect a whole bunch more taxes, it is more to deflect all the investing in property. More like the old strap hanging on the wall that kept up kids in check, back when.

Of course it will curtail investors, it stops them leverging up past 80% to get more deposits for more property which heast the market even more.  I agree on cashed up, but thats simple, make ownership kiwi only.
In terms of cut, what are you suggesting a limit be? 95% and 30 years?  99% and 40 years? 100% and 50 years?
At some point the NINJAs simply cannot buy a home....The first time buyer's ability to boorow porks and leverages the entire market, 80% LVR and 25 years sets a sensible level and risk, anyone without that has to rent.

There are plenty of Aucklanders with a mortgage free house worth $1,000,000 to 1,500,000 who would never be impacted by an LVR - they can buy multiple investment properties before an LVR of 80% would have any impact on them and if they already own 5 at say $500,000 each and they increase by 15% over the last year and another 15% in the next 12 months then they have another $750,000 of equity to borrow against.
An LVR simply means the rich get richer and in the countries that have an LVR home ownership rates are far lower than NZ.

Wheeler noted that house price inflation had increased and the bank was watching both house prices and household credit growth closely. He also said the New Zealand dollar was over-valued and hitting exporters.
Am warming to the man. In two sentences he has simply explained the two main issues that monetary policy should address. Left unstated, but somewhat obvious, is that if the OCR was the only tool he had, dropping it would help solve one of the problems but exacerbate the other.
So he needs another tool for the exchange rate, and yesterday's report suggested he may well be using one- printing money to buy foreign assets. No need for LVRs or other similar tools; maybe at most leaning on the banks, and even Treasury, to slow their inbound capital flows, and use NZ sourced funds instead.
The test will be whether he acts with conviction on the exchange rate, or merely tinkers with it .

Agree with you that with only 1 big lever at present, he can't do one thing without affecting the other. Maybe he should have bargained hader with BE when reviewing the RB act when he took the job?
Or just make a choice rather than wait and hope

...the bank was watching house prices...
Yeah, watching prices go through the stratosphere while sitting on the sideline

It is what Wheeler does not speak about that really dominates his thinking.....bank profits!
The game is to ensure the big banks rake in the dosh so Tweak can cream off the tax and so fund the vote buying schemes like infrastructure splurging.
Any suggestion the RBNZ will throttle that profit/tax flow is humbug.
So expect the property inflation to continue and no doubt the RBNZ jawboning.
And anyone wanting to accurately determine inflation in NZ need look no further than property.
All will be well so long as the rest of the world buys NZ agricultural exports. And that also means fatter profits for the banks that 'own' most of the sector.

Unfortunately you're not wrong there Wolly!

Exactly Wolly - and if we remove most of the taxes the Pollies game is busted. But so many people want more taxes which just creates more of the same damn problem.

Only for people cranially incapable of thinking beyond themselves.
Otherwise, the services are just communally done, often easier due to (physical) economies of scale.
Both approaches are compromised now - which makes the above remark, like Turei's 'poverty' comments - somewhat dated.
Read: irrelevant.

PDK what a load of bollocks. You fail to distinguish between self-responsibility and self-interest. 
If Social equality actually worked we would not have so many people falling through the cracks in society. Nanny state does not empower the individual to take self-responsibility it empowers those with self-interests to succeed over the efforts of others. Economies of scale are lost.
People on the whole will do more for others than what they will do for themselves and those with a strong self-interest are able to be prey on the majority. People will also do more to avoid pain than pleasure so rather than face up to self-responsibility and accept that is their right they allow themselves to be manipulated by others to keep the peace.
READ some psychology. Understand how marketing and advertising are done.  

We dont have socially equality, we have growing in-equality as the haves insist on taking yet a bigger share. You are laughable listening to you tell somelese to read when really all you come out with is ex-rand lovel.

We have Socialism Politics and have had for quite some time.  So technically all this redistribution of wealth via the tax system was to improve others who the State held as unequal.  The redistribution does not work....and that is not a laughable issue. And people with your thought patterns need to take some responsibility in cleaning up the mess. But instead you would foolishly promote CGT or other methods of enforced redistribution. It is foolish to keep trying methods that are not working.  
So when are you going to wake up to your foolhardy concepts that are keeping people poor?  

Its pretty amazing the current brand of libertarianism, and how it functions in politics today. I think it any real or original sense of libertarianism, both myself and Stephen would be considered members. But notaneconomist the self branded Libertarian wouldn't even give our positions the time of day because we do not have enough of the faith.
Conservatism (again only in the US sense) has taken over the new Libertarianism, and uses it as a wing of their politics. Because the government is economically powerful and useful then its important to conservatism to shut out any form of democratic influence from the government. This leaves government economic policy to a small group of elite conservatives. In this politics the wider group of libertarians demand that they become spectators, unable to have democratic influence of the government for ideological reasons.
Of course any true believers will be and are bewildered and confused and appauled when the government steps in and implements financial bailouts and other ideological contradications depite insisting its true belief in the market ideology, but as long as this group remains insulated enough only a few are disuaded from their beliefs. Elite conservatives will always talk small government, but as usual the proof is in the pudding and they are not stupid enough to be true believers in the faith.
The amazing thing is that the Libertarians accuse everybody else of being the brainwashed masses, especially so when any outsiders demand some kind of political influence on the government policy.

Hm, google news search for RBNZ warns, 1230 results
google news search for RBNZ acts, 8 results

Yup, Woll has it nailed.  Pollies Always Buy Votes.....
Gnats do it via infrastructure spend (although it has to be said that at least Buses can run on the Roads, and Buses are a Good Thang, no?) and PPP's.   No thought as to the social consequences of most of the spend, because the Market takes care of Everyfing.  Very susceptible to assumptions that turn out to be unsustainable.  See almost anything by PDK on this.
LabGreen will do it via good ol' redistribution, taking munny off of nasty fat cats and giving it to Entirely Deserving Cases-du-Jour.  Or, what the hey, just borrerring it of Obliging Furreners.  No thought as to the future revenue streams needed to support this debt or indeed to clip the tax ticket on.  Or to the social consequences of mis-diagnosing 'Entirely Deserving'.   Very susceptible to John Galt (the revolt of the Producers), interest rates and credit ratings, and the whims of the Unions.

Well true in terms of vote purchasing methodology some years back - but with inequality on the rise the old perceived 'right' of society has to buy votes from the growing 'left' of society.
Such a trend was evident in terms of what the Nats had to do to get into power - they promised to keep all of dear Aunty Helen's redistribution policies in place (you recall BE's "need to swallow a few dead rats") AND at the same time they had to buy their own faction off with PAYE cuts.
So, the 'right' has become the party of have-your-cake-and-eat-it-too.

On the contrary, if the last elections were anything to go by only 74% of Kiwis voted meaning less people (generally at the lower end of the socio-economic scale) give a damn about politics and the right to vote. It's a very clever ploy to keep the "have nots" in the doldrums for longer. They become so disillusioned that they don't really see the point in voting...hence the "haves" can, as you say; "have their cake and eat it too".
Watch this space but the rise of inequality in NZ will only lead to the Nats remaining in power for longer...even if our country falls apart at the seams.

FYI updated with comments from ANZ, ASB and Westpac. Also Harbour Asset Management's Christian Hawkesby on 'open mouth operations'.
Trouble is when anyone looks closely inside the mouth, it's toothless...


Post OCR Announcement phone Call


Ring ring...


Hello Alan Bollard speaking...


Yes Allan, Graeme Wheedler here !


Who sorry..?


 Graeme ! Graeme Wheedler  at the Bank, the Reserve Bank you know..!


Oh yes of course Graeme, sorry I was just in the middle of proofing the Memoirs volume two.....


Oh sorry Alan, should I call back ..?


No no, look fine , what can I do for you Graeme...or chuckle , Wheelie as I used to call you.


Well look Alan, you don't mind if I call you Alan now do you..? it just seems the Sir thing probably a little unnecessary nowdays with me being the Numero Uno at the Bank and all.


Long pause...............................ah , yes quite Graeme, now what...


Oh yes, Well Alan, I just called to let you know I think I'm really getting the hang of the Do Nothing Policy, you know, really getting to the pace of the whole  thingy.


Well er, that's really goo.....


Yes , just went out there with so much confidence today, looked the bleating press square in the eye, pointed out the bloody obvious , told them I'm watching even more closely than the previous outings, and then basically told them I intended doing bugger all about it....(triumphant snort)


Well Graeme, sounds like your getting th..


So hey, Alan you never told me that my competence would never be questioned by any of the number munching deadbeat journos.....I mean wow hey.. this is money for rope..!


Sorry Graeme, I thought you would have taken both as a given....sigh


Yeah well anyway Alan just thought I'd let you know , that's all, the Bank's in safe hands  and oh hey , I've got the concerned look down, but wondered if next time we catch up you could give me some pointers of that exhausted one of yours, I always loved that.


 Um yeah , sure Graeme , we could do that ( patience thinning)

Oh , Graeme,....what happened to the  post match doughnut thingy exactly...?


Oh you mean with the lamingtons and ladyfingers now...?


 yes that Graeme..?


I was looking for the point of difference early on , you know the new broom, letting them know who was in the drivers seat so to speak....


But, you do know Billy Bob likes a good doughnut don't you..?


Does he ..? does he now..?       


You there Graeme..?


Uh , er yes Alan , just ah, making a note of something .


(Bolly) Allright well, I suppose I'd better get back to it, these epics don't write themselves you know..!


Oh yes sure , right Alan, great to catch up and if  your in the neighbor...




Wonderfull ! see you then. 

Memoirs christov? are you there christov? memoirs? haha..de..haha
Funny you should write that. Had jotted the following down .. decided against it .. but now .. you've got me going .. haha
Gareth Morgan has written a lot of stuff, but never about his years at RBNZ
Did he spit the dummy?
Was he a maverick?
Did his face not fit?
Was he pushed?

There is a code of silence within the finance industry. It's secret mens business.
There is a cone of unquestioning silence within the finance media.
Apart from Nick Leeson and Edwin Lefevre you won't find financial memoirs from the sharpshooters.

I didn't suggest it was a big book iconoclast...probably right up there with Italian War Heros, Polish Who's Who....Great Australian Diplomats...you know, pocket book stuff. ...don't think the make the carboard matchclips anymore.
Was Morgan there in the Muldoon Era...? there was a lot of in house dissension at that particular time....R%BNZ wise I mean.

Yeah .. didn't think of that .. a muldoon conflict
While you're there, and while it's still fresh in my mind .. been pondering it for a while
As I have followed the goings on here at interest.co.nz one thing that is crystal clear is that I can see a huge opportunity for an NZ based IT internet application .. it would require a bit of financial grunt to get it off the ground together with some serious negotiations with the couple of disparate existing operators who only touch on the input in a tangential way .. I can't do anything with it .. don't have the contacts .. requires local boots on the ground .. but .. the sort of thing you might be able to angel-ise .. The technical side is not hard .. there is just a yawning untouched gap .. I speak from a lifetime in IT, business systems development, robotics, technical programming etc ..

I'm tapped up at the mo , looking at stocks with the fringe coin....tell you what though , first thing you have to do is formulate the business plan to gain R+D stage, once that's a conceptually viable idea ,I'll give you a link to an investment network and you can run it through and see who pops up sniffing.
You will have to have a a tidy ,concise pitch to the plan with projected potential on ROI's. 

FYI updated with BNZ's Stephen Toplis, who's always worth reading.

"Look chaps, I can't put interest rates down 'cos you lot will only borrow even more to waste on buying these shacks you call houses off each other. Yes, I know the NZ dollar is too high, but that's not my fault is it? That's because you lot have been a silly bunch of plonkers, now isn't it?
So I'm just going to sit on my hands until you lot learn your lesson. When unemployment goes over 7.5% you will see that these shacks of yours are ridiculously over priced and you will stop wanting to be bank fodder. In the meantime, just carry on as you see fit and if you really want to bow down to your Aussie masters that's fine by me."

FYI updated with comments from Greens

.... oddly enough , I find some concurrence with the Greens ....
Wheeler is saying , if house prices go up too much ( " too much " being defined by his gut feelings ) , I will push up the OCR and crush the entire economy ......
.... brash fellow !

An 80% LVR requirement means a 1st home buyer would need to find 100k to get into a 500k house.
Seems a bit tough doesnt it?

Exactly SK - I think they will lock some first home-owners out of the market at that LVR.  

Don' worry SK an LVR won't make a lick of difference to a cashed up foreign buyer. Move along, nothing to see here

What to do ay?
It's been a stiffling summer, but despite the heat Graeme Wheeler still has cold hands, so he's going to sit on them a while longer. It's been an affliction quite common amongst NZ Reserve Bank governors and they have these delayed responses only once their hands are on fire..if then!
So what to do? No to an OCR cut as a way of addressing housing inflation vs. low overall (import related) inflation - but yes to some other forms of monetary intervention as way of dampening the hot $NZ?
Rocks and hard places! With the heat as well...who could sleep!
Lowering the OCR increases a housing-led spin on inflation figures - and lowering the $NZ raises the import-led spin on inflation figures!
Hmmm...is that why the easiest solution is to watch and wait...watch and wait....Wait!...Watchout!

RBNZ warns that it is 'watching-house-price-inflation'
Haha - WATCHING it is going to do a lot!
***Watching it go through the roof***
Great stuff team - Keep up the amazing watching over 2013 and beyond!

Watching ?
Looking ?

Reminiscent of the famous Admiral Horatio Lord Nelson, the one with the telescope to his blind eye "I see nothing", but, "I am looking".

"Nothing to see here, move along"
"These Aren't The Droids You're Looking For"

It;s the UN solution, chaps and chapesses.
'Let's hold Committee Meetings until they're All Dead'.
Working example:  Syria.

If they do nothing for long enough perhaps people will forget they even exist.
Some kind of war of absent attrition.

Advice to Wheeler.
Go to Farmers with $3 if you can find the spare change.
Buy that china mug that has printed on its side
with a bit more time and a dip into his wallet he could get the one that says

The AFR has reported the news as follows:
Link here if it works, given its a paid subscription: http://www.afr.com/Blogs/Markets%20Today#668a6802-6b2d-11e2-997e-65c5260...
Transcript here:
The Reserve Bank of New Zealand kept interest rates unchanged at 2.5 per cent this morning. Par for the course, sure: rates have been there since March 2011.
This is the third policy meeting for governor Graeme Wheeler, who took over the reigns from Alan Bollard in September.
But what’s worth coming in on is the accompanying commentary, in which the RBNZ has described the NZ dollar as “overvalued”.
Pretty strong words, there. And having a quick run through the RBNZ’s policy meetings last year, it doesn’t look like they’ve used the word “overvalued”.
For that matter, neither has the RBA. At least not in the official statements released on the first Tuesday of the month (and with the first meeting for 2013 coming up on February 5).
■ It’s hard to find any use of the word “overvalued” in any of the official paraphernalia, such as slides and speeches. What we have become accustomed to is “the exchange rate remains higher than might have been expected ” given the pull-back in the terms of trade last year.
However, it would seem that (i.e. if you Google ... or Bing) some of the central bank big-wigs have made comments in what would seem like Q&A sessions about the level of the dollar.
Deputy governor Philip Lowe told a conference in Sydney in July: “When you have very high terms of trade and a once-in-a-century investment boom you are going to have a high exchange rate.” He added: “Where the currency is at the moment, it is hard to make a strong case that it is fundamentally overvalued.”
And John Kehoe reported this from assistant governor Guy Debelle in August on the sidelines of a Westpac conference.
“Responding to a chart displayed earlier by Westpac chief economist Bill Evans showing the dollar was the most overvalued since 1990, Dr Debelle said that was probably correct.
“But if you go back to the ’70s, you wouldn’t actually say the currency is all that out of whack,” Dr Debelle said.
Governor Glenn Stevens “has previously described the Australian dollar as ‘overvalued’,” according to this AFR piece, and while I’m not denying its existence, I’m struggling to find those words actually coming out of his mouth.
■ The bottom line is the RBNZ has become more explicit in describing its view of the currency.
Its one reason I'm warming to Mr Wheeler. He is a little more direct in his language, and saying the currency is overvalued means he really must do something about it. Perhaps the money printing and foreign purchases noted yesterday were a sign of a more active exchange management.

This government will not change anything related to housing - prices will continue to rise as supply of new homes is restricted due to red tape etc, etc. 
The one change that would make a massive difference in Auckland is to ban Chinese non residents from buying a house. If the government wants to know how many Chinese are buying in Auckland they simply need to have a representative at Barfoots auction rooms and they will see house after house knocked down to a Chinese buyer, especially on the North Shore.
We can't go to China and buy a house so why should Chinese non residents be permitted to buy up NZ. The ones that leave the homes vacant only pushes rents for everyone else higher.
But of course the higher prices go the more the politicians and councillors make on their own real estate portfolios. So don't expect to see any action on this front. 

Interesting individual Mr Norman - wants to screw every old person who has to live off a fixed income by cutting rates even further, then wants to print money, and eventually cause inflation which then screws over every borrower with much higher rates than other wise necessary, not to mention again, the elderly who will have to then contend with inflation on a fixed income. Who actually votes for this idiot ? Does he actually understand what he says ?

Perhaps he understands that this species have a tenuous margin, which we've overshot via fossil fuels.
Perhaps he understands that the cherry-picked best of the resources are gone, and the old people got the best of them. That what granny considers 'normal' was actually the peak.
Perhaps he understands that the growth-requiring fiscal system is in permanent trouble.
Perhaps he realises that it is the young who are getting screwed - they will have to deal with the climate change they didn't create, with the other pollution they didn't create, and do it with depleted resources, aquifers, and energy-sources.  Perhaps he realises they'll be pissed off, and he'll get their vote.....
Doesn't sound like an idiot to me.....


PDK - no that absolutely makes sense now, he actually wants to kills them off - hide your muns & dads folks. But with regards the young, it will hurt most of them nearly as much, but hey, colateral damage, who cares right? Other cynics of course would agree with  the resources and environmentals issues you mention, perhaps he actually can contribute something sensible in that area, alone with killing off the elderly.

Grant A - The word Genocide as defined by Raphael Lemkin who coined the termed comes to mind. 

There we go. Spin 101.
I point out that the planet can support perhaps 2 billion people - at subsistence level, long-term. (at our level, perhaps 1 billion).
Where does that say it is desirable or desired?
The question with spinners, is always whether (and why) they believe their stuff and why not if not. Denial doesn't change reality, no more does belief, or vested-interest.

PDK - For simplicity -  Belief = can or can't.  Reality is different depending on which one (can or can't) is applied to the holder.
Denial is not accepting that there are  different choices etc. The my way or the hghway syndrome. 
Fear keeps people in the Can't position. When fear is present people don't take action and search out others who share the same fears.  
Maybe you could use some of the time you spend posting on this site to educate yourself on the brain.  
Subsistence as in Philosphy is also a good place to further your education.

I prefer to work from first principles, and in physics, certainly the sciences.
No amount of emotion, positive or negative, alters the energy equation. Applying intelligence to it gives us efficiencies, but they are not open-ended. So many folk - and you are one of them - think that, the human brain being unlimited, it has the ability to do nlimited things.
Einstein could out-think you, me and several hundred thousand others - but free-falling without a parachute, he'd still hit the ground at a velocity guaranteed to stop the train of thought relatively rapidly. Physics trumps emotion, every time.

The OCR has very little effect on house prices. House prices are driven by desire & lack of authentic investments or tax disincentives.
In 2008 ocr = 8.25, house prices 10% - took lehmans collapse to flatten.
Currently Uk/usa - Ocr = 0.25 - house prices not skyrocketing.

Bull poop Mortgage Belt - I know numerous, mainly young people, including a son, who have bought a home in the past 12 months purely because of the 5% something interest rate, it is the only way they are slightly affordable for them. Without that they would be renting. But the worry is that so many could not afford an 8% rate and should never have bought a house because of that fact - think about it, what would happen to supply if mortgage rates went to 8%, no question it would go up considerably, and what would happen to house prices (already at a historic 5.5 times salary and rising again), leave you to ponder that ?
Of course your uninformed answer has always been that rates couldnt go up because the economy couldn't stand it - I say unformed because a little look back in history both here and elsewhere shows that is not always the case - soemtimes they go up almost deliberately to stuff the market quietly rather than a collapse, eitherway no fun for the over-leveraged. And if you think you know what going to happen to global inflation and interest rates over the next 2-5 years, in a world of money printing and negative real interest artifically suppressed temporarily by central banks, that would be supreme arrogance
UK & USA houses prices not rising much despite a 0.25% cash rate, may perhaps be something to do with the massive over supply that occurred when people couldn't afford to stay in their home ?  In fact if the banks weren't being bailed out over there with money printing, and they really sold up the defaulting households, the US prices would be down a whole lot more than the 40% they are on average currently. The interest rate is certainly irrelevant in that environment.

Thought I might flush out the bank apologists  -  who are trying to reinforce the ridiculous fictional notion that an OCR hike would somehow dampen house prices. 
Let's say, next RBNZ review decides to hike to 2.75%  -  so what -  this will have very little effect on overall house prices, especially in select Auckland & Chch areas. Then let's hike to 3.0% by September   -  big deal  -  so floating mortgages are now 6.8%  There are many drivers on prices here besides interest rates.
Then once they try to hike, they will kill the productive economy  -  then have to backtrack to cuts again.
Hello  -  the rest of the world has drastically changed tack.   We are still in a 1990s/2000 mindset.

Mortgage - I'm not apologist for the banks, indeed I'd be crictical of the loose current requirements they have for approvals - again, unless they can see that the borrower can handle a 8% plus interest rate, ithey should either demand a greater deposit or just refuse the loan.
But I'm not talking about a few 0.25% rises, where id you get tyhat from, I'm talking 3% plus over the next 2-5 years, thats what many younger borrowerrs won't be able to handle. Yes there are many drivers on price, but I go back to my point, the biggest one is supply/demand. You are making the mistake that with interest rates low currently,  and demand strong, and supply low, its always going to be the case, it won't.