The dampening effect of LVRs on house price inflation and credit is expected to reduce wealth and credit effects on consumption that might have otherwise increased due to a rapid expansion in house prices. This, in turn, is estimated to have reduced CPI inflation pressures by an amount similar to a 25–50 basis point increase in the OCR.
3  Reserve Bank simulations of the counter-factual – what would have happened to house price inflation in the absence of LVR speed limits – suggests house price inflation would have been about 2.5 percent higher than its current level.