ft. com / video / 62d5bfc4 - 3b89 - 39ca - 97bf - c19d6fe097fc kay, j and king, m ( 2020 ) ‘ radical uncertainty : decision - making beyond the numbers ’. poloz, s ( 2020 ) ‘ dealing with exreme uncertainty ’, bank of canada speech. ratcliffe, j and kendall, r ( 2019 ) ‘ monetary policy strategy in new zealand ’, reserve bank of new zealand bulletin, 82 : 3. stevens, g ( 2009 ) ‘ the conduct of monetary policy in crisis and recovery ’, reserve bank of australia speech. a least regrets approach to uncertainty : hawks, doves and the white heron ( he kotuku ) annex 1 : summary of least regrets monetary policy since the arrival of covid - 19 source of uncertainty immediate postcovid period march - may 2020 initial recovery from covid february 2021 most recent august 2021 starting point uncertainty uncertainty so heightened that central projections were replaced with alternative scenarios. health measures more effective in containing covid - 19 than initially feared. although a robust recovery in spending is underway, there is ongoing uncertainty about the impacts of covid - 19 on the supply side of the economy. several published downside scenarios highlighted a material risk of a severe economic correction. although risks to the outlook were becoming less skewed, it was unclear how the economy would cope with expiry of wage subsidy support and the absence of international tourists. downside risks of a severe contraction have declined as evidence has accumulated that demand in the economy is more resilient to covid - 19 than we had feared. a prolonged downturn could still present a threat to inflation and employment objectives. increased confidence that robust demand and supply constraints will feed through into more persistent inflation pressures, and that employment is at its maximum sustainable level. maintain stimulus until confident that inflation and employment objectives will be sustainably achieved. reduce monetary policy stimulus to reduce the risk that inflation expectations become unanchored. bias of risks to the outlook our ability to stimulate the economy could have been constrained by the effective lower bound. risks to achieving our mandate significant threat to employment mandate if risks to the economy materialised. a decade of below - target inflation increased risk of expectations becoming deanchored on the downside. least regrets deliver stimulus sooner rather than later, thus minimising the risk that stimulus delivered turns out not to be enough. considerable monetary and fiscal stimulus supporting the economy.

speeches figure 3. 2 house price inflation and price - to income ratios by urban area increased housing demand has been driven by record net immigration, low mortgage interest rates and increasing investor participation. net migration flows continue to hit new records, with annual net plt migration now approaching 70, 000 persons. migration flows are also becoming more dispersed, with non - auckland numbers recently rivalling the flow into auckland. mortgage rates declined over 2015 as the reserve bank eased interest rates in light of on - going low cpi inflation. one and two year rates are now in the low 4 percent range, which new zealand has not seen since the 1950s. a dominant feature of the housing market resurgence has been an increase in investor activity ( figure 3. 3 ). in recent months, investors have accounted for around 43 percent of sales in auckland and 38 percent in other regions. investor borrowing has maintained much of its momentum even though it is taking place at somewhat lower average lvrs. the prospect of capital gains appears to remain a key driver for investors in the face of declining rental yields. figure 3. 3 new zealand house sales by buyer type ( number of dwellings, s. a. ) bis central bankers ’ speeches the declining affordability of new zealand housing and increasing investor presence have seen a downward trend in the share of households owning their own home. this ratio has fallen steadily since the early 1990s, reaching 64. 8 percent at the 2013 census. the recent increase in investor housing activity suggests that the home - ownership rate may have declined further since 2013. the reserve bank considers that rising investor participation tends to increase the financial stability risks relating to the household sector in severe downturn conditions. evidence from the uk and ireland shows mortgage default rates significantly higher for investors ( at any given lvr ). there are likely to be a variety of reasons for this, but an important one is that owner - occupier households need to move out of their own home if they default, giving a powerful incentive to continue servicing their mortgages if at all possible. investors do not face the same incentive for their rental properties and are also more likely to face income shocks ( like rental vacancy ) at the same time that house prices fall. our view on the riskiness of investor lending is shared by other banking regulators. in recent years concern about investor lending has led the australian prudential regulation authority to limit growth in australian bank lending to residential investors, the basel committee on banking supervision has recently recommended significant increases in the amount of capital