Monetary policy can not deliver long-term social equity, particularly in the housing market, the Reserve Bank governor Graeme Wheeler has said.
In a speech reviewing 25 years of inflation targeting, governor, Graeme Wheeler, said monetary policy could influence mortgage rates and the demand for credit, but could not influence zoning regulations, planning consents, or productivity in the construction sector.
Mr Wheeler said mortgage lending restrictions would remain in place until the central bank was confident that house price inflation was contained.
Westpac chief economist Dominick Stephens said the governor was stating the obvious.
"I think the Reserve Bank is reminding us of the limits of its policies. The Reserve Bank is there to ensure that inflation remains low and stable and that the banking system remains sound," Mr Stephens said.
"It is not there to achieve social goals on housing, it is not there to make housing affordable for all, or anything like that, that's really the job of the Government," he said.
Mr Wheeler also said many central banks were seeing considerable appreciation in asset prices for such things as fixed-income securities, equities and real estate as investors are aggressively searching for yields, in the form of dividends, interest and other income.
