RBNZ’s Orr: Government should look at tax policy to rein in surging house prices

The Reserve Bank of New Zealand (RBNZ) urges the government to consider changes in the tax policy, in a bid to stem the rise in house prices, Governor Adrian Orr said in an interview with Radio New Zealand on Thursday.

Key quotes

“We will call on them to look at the full suite of whole-of-government instruments, and tax would be one.” 

“We will talk very openly about that.”

“It’s very clear in the letter that our objectives do not change, our operational independence is not impacted, and they want advice.”

“What is being suggested is that we have consideration for house prices, which we currently do.”

Orr has framed the letter as an invitation to advise the government on how to tackle housing affordability, and said the RBNZ will not change the way it conducts policy, per Bloomberg.

Orr said Wednesday that the central bank remains “completely focused” on its core mandates of inflation and employment, and turned the spotlight back on the government with regard to the housing market.

NZD/USD reaction

NZD/USD is off the multi-year highs of 0.7015 amid mixed market sentiment and the clash between the RBNZ and Treasury.

The spot was last seen trading at 0.6997, down 0.06% on the day.

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