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The RBA has kept interest rates on hold. Here's why it'll be cautious from here on 
The Reserve Bank of New Zealand in its Financial Stability Report released today, mentioned its aim to curb the nation’s rising house prices by imposing adding lending restrictions on banks releasing home loans. However, no specifics were mentioned in light of the policy implementation.
The RBNZ Governor Graeme Wheeler last month, had cut the official cash rate to a record-low of 2.25 pct, hinting at further rate cuts as inflation undershoots 1-3 pct target. Further, the CB Governor is concerned that lower borrowing costs could further hike housing demand, posing serious risks to lenders and the financial system if there was a sudden collapse in property prices.
The NZD rose as much as 1 pct after publication of the RBNZ’s report, which dampened speculation that new restrictions could be announced as soon as today.
"With no added macro-prudential policy imminent, tension will remain for the time being between the monetary policy and financial stability objectives," said Nick Tuffley, chief economist at ASB Bank in Auckland.
The housing market is rebounding, with prices nationally rising 12 pct in April from a year ago period, according to a government property research company. That leaves no room to the RBNZ to consider debt-to-income ratios as a tool in its memorandum of understanding with Finance Minister Bill English.
"If we were going to move in that direction we would need to bring them into the MOU, and discuss that with the minister," said Deputy Governor Grant Spencer at the news conference today.
The New Zealand dairy industry remains under pressure as prices continue to mull. Fonterra Cooperative Group, the world’s biggest dairy exporter, has cut its milk payments to New Zealand farmers to a nine-year low as a global glut and weak demand from China weighs on world dairy prices.
