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The interaction between monetary and macro-prudential policy

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Abstract

The Reserve Bank has recently developed a macro-prudential policy toolkit. This article considers how macro-prudential policy could interact with the Reserve Bank’s monetary policy function. While these policies are set with the differing objectives of financial and price stability, respectively, there is the potential for material spill-overs between them. Preliminary conclusions about how they should be set in conjunction with each other are discussed, touching on the interactions between the speed limit on high loan-to-value ratio (LVR) lending and monetary policy.

Suggested Citation

  • Ashley Dunstan, 2014. "The interaction between monetary and macro-prudential policy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 77, pages 15-25, June.
  • Handle: RePEc:nzb:nzbbul:jun2014:05
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    File URL: http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/2014/2014jun77-2dunstan.pdf
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    1. Enzo Cassino & Zoe Wallis, 2010. "The New Zealand dollar through the global financial crisis," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 73, pages 20-30, September.
    2. Michelle Lewis & Lauren Rosborough, 2013. "What in the world moves New Zealand bond yields?," Reserve Bank of New Zealand Analytical Notes series AN2013/08, Reserve Bank of New Zealand.
    3. Borio, Claudio & Zhu, Haibin, 2012. "Capital regulation, risk-taking and monetary policy: A missing link in the transmission mechanism?," Journal of Financial Stability, Elsevier, vol. 8(4), pages 236-251.
    4. Tim Aldridge & Amy Wood, 2014. "Monetary policy decision-making and accountability structures: some cross-country comparisons," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 77, pages 15-30, March.
    5. Paoli, Bianca De & Paustian, Matthias, 2013. "Coordinating monetary and macroprudential policies," Staff Reports 653, Federal Reserve Bank of New York.
    6. Mathias Drehmann & Mikael Juselius, 2012. "Do debt service costs affect macroeconomic and financial stability?," BIS Quarterly Review, Bank for International Settlements, September.
    7. Ross Kendall & Tim Ng, 2013. "The 2012 Policy Targets Agreement: an evolution in flexible inflation targeting in New Zealand," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 76, pages 3-12, December.
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    Cited by:

    1. Günes Kamber & Özer Karagedikli & Christie Smith, 2015. "Applying an Inflation-Targeting Lens to Macroprodential Policy "Institutions"," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 395-429, September.
    2. repec:rba:rbaacv:acv2017-02 is not listed on IDEAS
    3. David Hargreaves, 2016. "The macroprudential policy framework in New Zealand," BIS Papers chapters,in: Bank for International Settlements (ed.), Macroprudential policy, volume 86, pages 141-146 Bank for International Settlements.
    4. Ioanna Kokores, 2015. "Lean-Against-the-Wind Monetary Policy: The Post-Crisis Shift in the Literature," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 65(3-4), pages 66-99, july-Dece.
    5. repec:rba:rbaacv:acv2018-02 is not listed on IDEAS

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