Were you surprised this morning (Monday) to see comments and reports of a speech from Reserve Bank Governor Graeme Wheeler this week that almost built it up like the second coming of Christ?
Because I was.
Wheeler will be speaking to the the Canterbury Employers’ Chamber of Commerce at 1pm on Wednesday.
The Reserve Bank Governor has been making a speech to the Canterbury Employers’ Chamber of Commerce at this time of year for several years now. This has included holding a lock-up in Wellington allowing reporters to read an embargoed copy of the speech and news release, as it's doing this week.
As a Reserve Bank spokesman puts it: "We’re not doing anything different with this lock-up and speech process than we’ve done for quite a few years now."
So some of the excitement, including the suggestion the Reserve Bank's lock-up is unprecedented for such a speech, is misplaced.
That said, Wheeler may well say something important, market moving and/or interesting. He is the Reserve Bank Governor after all.
He may well provide more explanation for last week's Official Cash Rate review that saw the central bank come out with the intriguing line that the "OCR could go up or down."
And he might provide more detail on the Reserve Bank's plans to make trading banks hold more capital against loans to owners of multiple rental properties, as its ongoing battle with the hot Auckland housing market continues.
Late last year Reserve Bank Deputy Governor Grant Spencer said the Reserve Bank was working on how to categorise a borrower as a residential investor, noting it could be based on the proportion of their total income that's coming from their investment portfolio, rather than just the number of houses they own. This could make loans more expensive for property investors, and potentially harder to obtain. In November Spencer said the Reserve Bank would be "consulting further" on these plans in the first quarter of 2015.
There's a whole range of issues he may talk about. And given his audience, these may well include the Christchurch rebuild and the New Zealand dollar.
18 Comments
I have come to the conclusion that the only way that Auckland House Prices can be controlled would be to surcharge mortgages by their post codes. Punishing all of NZ because of prices rising in NZs second city is ludicrous.
They could also introduce Stamp Duty by post code too - aren't post codes a brilliant thing :)
He may well provide more explanation for last week's Official Cash Rate review that saw the central bank come out with the intriguing line that the "OCR could go up or down."
Who cares - such sloppy and inept guidance deserves to be relegated to the rubbish tin - investors cannot make decisions based on the Governor's flip of a coin forecasting techniques - I suggest he remains deeply tucked up in his sinecure to await instructions from his masters. More money to be made following the Bank of Japan QE pronouncements which determine tangible outcomes.
I agree - it is a shame nobody outside of Auckland can own a vehicle to travel into the Metropolis to visit friends and relatives. Are you suggesting that the RB should keep house prices artificially low so that you can live next door to your dad?
When Auckland sneezes, the rest of NZ gets Pneumonia and that is how Aucklanders like it.
This is a big part of the problem. People can't be blamed for going where employment opportunities are best. However, we put govt in to set the conditions that will provide the best outcomes for NZ. Surely encouraging business to be elsewhere than Auckland would be to the benefit of Auckland and the rest of NZ
Yeah - or they could introduce restrictions on foreigners buying up existing residential property, introduce a capital gains tax on second (and 3rd, 4th etc) houses, remove tax breaks for having rentals and the government build more houses...
But that would be common sense right??!!
Do you really want to do that - would you like to live under a government like the one they have in China - no freedom of speech? House and apartment prices in China are only not far off Aucklands in China's main cities and for that you get a run down apartment and lung cancer becasue of the smog!
It seems from your report that the arrangements for the speech are not unusual.
However the following circumstances do seem to need comment.
1) He has missed his CPI inflation target, and likely by some margin. What are his plans to get back on target, why will they work, and when will they work by?
2) He has shown some concern about Auckland house prices. Apart from implausible effects on bank solvency, and possibly impacts on rents, why is he concerned, if he still is? (The government might reasonably be concerned, and many central bankers might be, but his stated targets do not mention asset prices) Does the inflation target miss now trump any concerns about house prices?
3) He has announced the change to a neutral OCR. That change is clearly worth comment. While he may not wish to steer the neutral one way or the other, he could easily give guidance on what circumstances would lead to an up or down move. Is it purely inflation? What time horizon is he looking at?
I would also personally like him to comment on incoming capital flows and the current account, our passive approach to currency wars, whether his targets and tools are in fact ideal and sufficient, but won't hold my breath.
It's not so much disdain for Aucklanders ..as such.
Its for the Aucklanders who do things like say the house prices are shooting up (where in the rest of hte country they're dropping), that the average wage is 67k (where in the rest of the country 35k-45k is more the liklihood). etc. The disdian is for Aucklaners who are like the "Amercians" for whom the US is the whole world/universe.
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