It is watched closely by the Reserve Bank as a barometer of domestic demand and an indicator of financial stability. Over the past 12–18 months, Reserve Bank policy has helped to moderate pressures in the housing market.
Increases in the OCR totalling 1 percent between March and July 2014 were intended to reduce the degree of monetary policy stimulus to domestic demand while the loan-to-value ratio restrictions (LVRs), introduced in October 2013, were aimed at reducing risk in the financial system.