Our Annual Report will be made public on Monday, outlining a wide range of investment activities. Most importantly, we are acting to ensure New Zealand remains less susceptible to short-term, sometimes only fair-weather, funding that creates pockets of excess debt and exacerbates economic cycles. We acknowledge that our actions at time may look confusing to the casual central bank observer.
On the one had we have set low interest rates to deliberately encourage investment and spending, which may be funded with higher debt. This is how monetary policy works. On the other hand we are saying we are concerned about some pockets of debt – especially in some highly leveraged households (residential mortgages), and in some pockets of dairy farming (rural lending).