RBNZ's Wheeler sees bigger rate rises if house prices stay high
WELLINGTON Oct 3 (Reuters) - The Reserve Bank of New Zealand would raise rates more aggressively than forecast if mortgage lending limits introduced this week fail to cool the housing market, RBNZ Governor Graeme Wheeler said on Thursday.
"If the loan-to-value speed limit is unable to slow house price inflation, larger increases in the official cash rate would be required," Wheeler said in an opinion piece in the New Zealand Herald.
He said he expected the official cash rate could increase by 2 percent from 2014 to the beginning of 2016. The RBNZ is widely expected to raise its official interest rate from a record low 2.5 percent in the first quarter of 2014 to tame inflation pressures.
From the start of the month, the RBNZ has required banks to keep lending to borrowers with mortgages of less than 20 percent of a property's value, the so-called high loan-to-value ratio lending (LVR), to no more than 10 percent of their total lending.
The New Zealand dollar rose to around $0.8300 on the article, from around $0.8265. (Reporting by Naomi Tajitsu; Editing by Janet Lawrence)
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