The Reserve Bank needs to drop interest rates, but it isn't working

The Reserve Bank of New Zealand faces a difficult decision: they need to drop interest rates to stimulate investment and spending but it isn’t working. In fact, all it seems to doing is driving up asset markets – particularly housing.

You have heard Bernard talk at the Lifetime Income seminars about the prospect for future interest changes. Watch this video for a more in-depth discussion of the dilemma the Reserve Bank faces in wanting to reduce interest rates further.

 

 

Global inflation and interest rates are at an all-time low in many developed nations; in some countries interest rates are even negative! In this Face to Face we talk with Bernard Hickey about the factors behind this, and why it is making the job of the Reserve Bank very difficult. They need to drop interest rates to stimulate investment and spending, but it isn’t working. In fact, all it seems to be doing is driving up asset markets – particularly housing.

 

 

 

The video is part of the Face to Face series of discussions at The Morgan Foundation.

Read the original blog here.