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Financial system still adjusting to higher interest rates – RBNZ

New Zealand’s financial system remains strong as it adjusts to a higher interest rate environment, Deputy Governor Christian Hawkesby says in releasing the November 2023 Financial Stability Report.

The full impact of previous interest rate increases globally is still to be seen. A weakening in global demand, particularly in China, has contributed to lower key commodity prices for New Zealand, and we are monitoring developments in the Middle East closely, Mr Hawkesby says.

“New Zealand households continue to face higher mortgage repayments. So far, the vast majority of borrowers have been able to manage these increases, but we know some people are struggling and falling behind.”

Businesses continue to service debt, although the dairy and commercial property sectors are facing challenges, partly due to higher debt servicing costs and other factors.

Our assessment is that New Zealand’s financial sector is strong and well placed to handle both the current adjustment to higher interest rates and more severe economic scenarios.

Importantly, this means our financial institutions are well positioned to take a long-term perspective and support their customers through current and future challenges.


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