Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


RBNZ, Treasury talk up global economic risks

Friday 17 February 2017 01:08 PM

RBNZ, Treasury talk up global economic risks in briefings to Finance Minister Joyce

By Paul McBeth

Feb. 17 (BusinessDesk) - The Reserve Bank and the Treasury warned incoming Finance Minister Steven Joyce about the international threats posed to New Zealand's economy, which they both saw as being relatively robust.

In separate December briefing documents to Joyce, both the central bank and the Crown's financial adviser said the local economy was performing well, with robust growth projected and the impact of the Kaikoura earthquake expected to be limited. However, they both also cited the global outlook as producing downside risks, with the RBNZ saying it was "the greatest threat" to local expansion, and could also trigger a correction to the housing market, which was the bank's main domestic concern.

At the time, those risks hadn't changed the Reserve Bank's view on the direction of monetary policy, with a November cut to the official cash rate taking it to a record low 1.75 percent and a track of no change built in for the next couple of years, although the bank's review this month introduced the chance of a rate hike in 2019.

Treasury secretary Gabriel Makhlouf told the minister the debate on protectionism in the US and parts of Europe had created uncertainty in international markets, and was "a threat to New Zealand's prosperity if it leads to reductions in global trade", which needed to be addressed proactively and seizing "the opportunities presented by Asia's ongoing growth".

Makhlouf outlined a number of topics the Treasury wanted to broach with Joyce, including the budget process, tax, housing affordability, social housing, the social investment approach, the changing global environment, macroeconomic issues such as the RBNZ's policy targets agreement, the business growth agenda, and the pension and New Zealand Superannuation Fund.

Joyce yesterday delivered his first major speech as finance minister, extolling the strength of the local economy and saying his focus for the May 25 budget was improving public services, building infrastructure, repaying debt, and cutting taxes. He also ruled out a regional fuel tax as a means to address Auckland's transport funding needs but he did put forward the prospect of electronic tolling as a means to replace petrol taxes and road user charges at some point in the future.

He fronted select committee for the half-year forecasts earlier this month, warning potential property buyers about paying too much at a time when interest rates could rise, while also sending the RBNZ back to do more work before giving them a new tool to limit mortgage loans as a ratio of a household's income.

The RBNZ had told Joyce it considered banks didn't internalise the risks facing mortgage borrowers in a severe downturn, and that debt-to-income lending ratios could limit the cyclical nature of lending practices to produce a more efficient market.

At the time of the briefing, the central bank's two highest priority policy initiatives were bank outsourcing, which it recently put out a new discussion paper on, and the International Monetary Fund's missions to review New Zealand financial sector regulation and supervision, with reports expected in April or May of this year.

(BusinessDesk)

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Our Fresh Water: Monitoring Report Confirms Serious Challenges For Rivers

• nitrogen levels are getting worse at 55 percent and getting better at 28 percent of monitored river sites across New Zealand • phosphorus levels are getting better at 42 percent and getting worse at 25 percent of monitored river sites across New Zealand More>>

ALSO:

Stats: Wind And Geothermal Emerge As Significant Sources Of Energy

Geothermal’s contribution to New Zealand’s total renewable energy generation increased from 11.5 percent in 2007 to 21 percent in 2015.... The value of wind jumped from $238 million (2 percent of total renewable energy generation) in 2007 to $884 million (6 percent) in 2015. More>>

Errors Found: Electricity Authority Dumps Transmission Pricing Modelling

The Electricity Authority is ditching the cost-benefit analysis at the heart of its controversial attempt to find a new way to divide up costs for the national grid after finding an expanding range of serious computational errors in the work by Australian consultancy Oakley Greenwood. More>>

ALSO:

New Record: Migrant Arrivals At 129,500 A Year

Annual net migration has been steadily increasing since 2012. "This was mainly due to the rising number of migrant arrivals to New Zealand," population statistics senior manager Peter Dolan said. "Fewer migrant departures also contributed to the increase in net migration." More>>

ALSO:

Launched: NASA's Super Pressure Balloon Takes Flight From NZ

NASA successfully launched its football-stadium-sized, heavy-lift super pressure balloon (SPB) from Wanaka, New Zealand, at10:50 a.m. Tuesday, April 25 (6:50 p.m. April 24 in U.S. Eastern Time), on a mission designed to run 100 or more days floating at 110,000 feet (33.5 km) about the globe in the southern hemisphere's mid-latitude band. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news