RBNZ Governor: Low Interest Rates Have Supported the Economy

The transcript outlines the resilience of New Zealand's economy and financial system amid the COVID-19 shock, highlighting the role of fiscal and monetary policy in mitigating impacts. It discusses the business sector's adaptation, international economic risks, and the housing market's response to monetary policy. The Reserve Bank's collaboration with the government on housing affordability is also emphasized.

What has been a key factor in limiting the economic shock to New Zealand's households and businesses during COVID-19?

• Increased taxation

• Higher interest rates

• Fiscal and monetary policy support

• Reduction in exports

What ongoing risk does COVID-19 pose to New Zealand's economy?

• Increased tourism

• Decreased domestic production

• International economic constraints

• Lower unemployment rates

How have lower interest rates affected the housing market in New Zealand?

• Decreased house prices

• Reduced consumer confidence

• Increased housing supply

• Spurred activity in the housing market

What is one of the channels through which monetary policy remains effective?

• Increased taxation

• Rising household wealth

• Decreased exports

• Higher unemployment

What financial risk is associated with high leverage in the housing sector?

• Increased exports

• Higher employment rates

• Decreased interest rates

• Potential decline in house prices

What measure has been announced to manage high-risk mortgage lending?

• Expansion of export markets

• Increase in interest rates

• Reimposition of loan-to-value ratios

• Reduction in fiscal support

What recent trend has been observed in the New Zealand housing market?

• Reduction in housing supply

• Decrease in first home buyers

• Record share of first home buyers

• Decline in new home building consents