The hot topic in the world of economics this week has been the widely expected tightening of monetary policy by the Reserve Bank of New Zealand on Wednesday.
The Reserve Bank is seeking to unwind the damage done by leaving interest rates too low for too long last year and printing too much money. Some concerns include,
- Homeownership is being priced out of reach for a generation of young kiwis who may now head to Australia.
- The initiation of a potential boom-bust cycle in house construction.
- A damaging inflation surge, increasing the cost of living rapidly for kiwi families.
So, why is the Reserve Bank now raising its interest rates? Read more about monetary policy in Tony’s View here.
