NZ's central bank says banks likely to withstand stagflation
Reuters
Published Oct 30, 2022 04:25PM ET
Updated Oct 30, 2022 05:00PM ET
By Lucy Craymer and Harshita Swaminathan
(Reuters) -The Reserve Bank of New Zealand said on Monday its annual stress test on the banking sector showed banks were "well placed" to overcome stagflation.
The RBNZ's Deputy Governor Christian Hawkesby said while banks' capital buffers would take a hit in a stagflation scenario, where high inflation is paired with negative economic growth, they would remain well above the regulatory minimums.
Hawkesby said that this was thanks in part to the build-up of capital since the 2008 global financial crisis.
Inflation in New Zealand is tracking just below three-decade highs at 7.2% and the central bank has been aggressively hiking the cash rate to try to dampen it.
Gross domestic product rose 1.7% in the June quarter, but increases in the cash rate raise the risk of a contraction.
The Central Bank is due to release its twice yearly Financial Stability Report on Nov. 2.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.