Reserve Bank Governor Graeme Wheeler today announced that he will not be seeking another term as Reserve Bank Governor.
His current term ends on 26 September this year, and Grant Spencer is expected to be the acting RBNZ governor for the first six months after Wheeler’s term ends.
Graeme Wheeler still believes that a sharp correction in house prices is a key risk to the financial system. A severe fall in house prices could have major implications for the functioning of the banking system and cause long-lasting damage to households and the wider economy. This view is shared by Grant Spencer who will take over from Wheeler in September thi syear. What this means is that there will be unlikely be any major changes to monetary policy between now and September.
For this reason, it is expected that the requirement for property investors to have a minimum of 40% down payment will stay in force for the rest of this year.
As for the OCR decision, it is still too early to tell whether it will increase before September.
Because this is an election year, it is likely the RBNZ will keep the OCR on hold in the coming months.