The Reserve Bank today released the March 2014 edition of the Reserve Bank Bulletin.
The Bulletin’s first article provides an introduction to the Reserve Bank’s loan-to-value ratio (LVR) restrictions framework. The Bank imposed an LVR ‘speed limit’ in October last year to slow growth in house prices and housing credit, and mitigate associated risks to the financial system and the broader economy. The article explores the Bank’s early experiences in operating the restrictions.
The Bulletin’s second article outlines and compares the key features of monetary policy governance and accountability arrangements of a range of countries with similar approaches to monetary policy to that used in New Zealand. The focus of the article is on describing the different approaches taken in each of the countries, rather than evaluating the relative merits of the different models.
The Bulletin’s final article traces the channels through which the exchange rate affects the Consumers Price Index (CPI). It looks at the issue in a New Zealand context, where fluctuations in export commodity prices have been an important influence. It also presents some recent Reserve Bank research into the nature and extent of pass-through, concluding that what causes the exchange rate to move matters a lot for how domestic prices respond.