6 Dec 2019

RBNZ underestimated bank capital changes' impact - economist

From Morning Report, 8:12 am on 6 December 2019

A chief economist says the Reserve Bank has underestimated the impact of its latest moves on borrowing.

The Reserve Bank is going to require banks to nearly double the amount of capital they need to support their lending.

The central bank has confirmed that big banks will have to raise the amount of capital they hold from 10.5 percent of their loans to 18 percent.

The deputy Governor Geoff Bascand says for customers it means a small rise in the cost of borrowing but there's also a payoff.

ASB's Chief Economist Nick Tuffley speaks to Kim Hill.