This was because attempting to move rapidly to a mid-point target could create damaging volatility in output and key relative prices, including asset prices, that could, in turn, threaten financial stability and undermine longer-term growth prospects. •  The requirement that the Bank monitor asset prices was inserted for two related reasons.
First, because of concerns at the rapid house price inflation and spillover into spending that New Zealand experienced in the mid-2000s (which was a key consideration behind the steady increase in the OCR during the mid-2000s that peaked at 8.25 percent in July 2007).