N.Z. bank may raise interest rates

Bloomberg

Rising house prices in New Zealand will increase the pressure on the central bank to raise interest rates, Finance Minister Bill English said Sunday.

“These households heading into quite high debt to buy highly priced houses need to be aware at some stage the RBNZ (Reserve Bank of New Zealand) will increase interest rates, particularly if the housing market keeps growing at rapid rates,” English said in an interview broadcast on Television New Zealand’s Q&A.

Low interest rates have helped fuel demand for property, raising prices at the fastest pace since 2007 and prompting the central bank to signal its concern about the risks if the housing bubble bursts. Central bank Gov. Graeme Wheeler is reluctant to increase the official cash rate from a record 2.5 percent because it may boost demand for the currency.