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Acting Reserve Bank Governor says interest rates are set to stay low

Contributor:
Fuseworks Media
Fuseworks Media

This week, in a rarely-granted interview, acting Reserve Bank Governor Grant Spencer sat down with our political editor Corin Dann and cast the net forward, looking at a continued period of low interest rates, capital gains tax and even a bitcoin economy.

With interest rates remaining low, Mr Spencer admits the Reserve Bank potentially has less "leverage over inflation" by adjusting CPI, but says the different LVR policies have gone some way to combat that.

"Interest rates can’t be used to head off a housing boom. We’re concerned about the risks in the financial system. And so those risks are going to increase if you’re going to have big booms and busts in housing. We’re trying to moderate that," he said.

When asked whether he believes capital gains tax should be introduced, Mr Spencer points to the Government’s announcement on the bright-line test being extended from two to five years.

"I think it has had an impact already - just the announcement of it. And so that’s helped to reduce the investor interest. That’s been one of the big drivers of why the Auckland housing has come off over the past year."

This week we’ve seen the price of bitcoin skyrocket, and analysts debating its future as a serious currency. Mr Spencer believes cryptocurrencies "are a real, serious proposition for the future", but may come in a different form than bitcoin.

"A cryptocurrency that has a more stable value will be the sort of cryptocurrency that’s more useful for the future," he said.

Q+A, 9-10am Sundays on TVNZ 1 and one hour later on TVNZ 1 + 1.

Repeated Sunday evening at around 11:35pm. Streamed live at www.tvnz.co.nz

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