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The interaction between monetary and macro-prudential policy

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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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    Cited by:

    1. Adam Cagliarini & Fiona Price, 2017. "Exploring the Link between the Macroeconomic and Financial Cycles," RBA Annual Conference Volume (Discontinued), in: Jonathan Hambur & John Simon (ed.),Monetary Policy and Financial Stability in a World of Low Interest Rates, Reserve Bank of Australia.
    2. 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.
    3. Malibongwe Cyprian Nyati & Paul-Francois Muzindutsi & Christian Kakese Tipoy, 2023. "Macroprudential and Monetary Policy Interactions and Coordination in South Africa: Evidence from Business and Financial Cycle Synchronisation," Economies, MDPI, vol. 11(11), pages 1-23, November.
    4. 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.
    5. Malibongwe Cyprian Nyati, 2024. "Should Monetary Policy in South Africa Lean against the Wind by Targeting the Financial Cycle?," Economies, MDPI, vol. 12(6), pages 1-20, June.
    6. 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.
    7. John McDermott & Rebecca Williams, 2018. "Inflation Targeting in New Zealand: An Experience in Evolution," RBA Annual Conference Volume (Discontinued), in: John Simon & Maxwell Sutton (ed.),Central Bank Frameworks: Evolution or Revolution?, Reserve Bank of Australia.
    8. Kaelo Mpho Ntwaepelo, 2021. "The Effects of Macroprudential and Monetary Policy Shocks in BRICS economies," Economics Discussion Papers em-dp2021-20, Department of Economics, University of Reading.

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