Australia and New Zealand are looking outside traditional monetary policy to do the same thing — cool red-hot housing markets in their biggest cites without hurting borrowers, banks and their economies — but they are following different paths.
The success, or not, of these experiments could prove critical to the outlook for interest rates in both countries, while offering a guide to other rich nations on how to manage housing booms when the broader economy still needs support.
The Reserve Bank of New Zealand is by far the boldest of the regulators, taking the radical approach of targeting only the Auckland housing market with restrictions on loan sizes and tougher capital requirements for lenders.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.