The Reserve Bank’s lending programme aims to lower home loans
The Reserve Bank of New Zealand (RBNZ) will launch the Funding for Lending Programme (FLP) next month to lower home and business loans and individual interest rates, making a negative official cash rate (OCR) unnecessary, according to economists.
With the $28 billion programme, economists said the RBNZ is less likely to make aggressive OCR cuts. As a result, ASB economists have revised their OCR forecast and now predict no changes “for the foreseeable future.”
“This reflects our view that the RBNZ’s Funding for Lending Programme (FLP) will be successful, as well as ongoing resilience on the part of the domestic economy,” said ASB economists in their latest report, as reported by Good Returns.
Meanwhile, ANZ chief economist Sharon Zollner commented that the FLP would most likely lead to a “more gradual path” for the OCR.
“Whether a negative OCR will be deployed at all is much more of a line-ball call,” she continued.
The RBNZ also plans to reintroduce loan-to-value ratio (LVR) restrictions in March next year following a surge in the housing market.
