While New Zealand’s official cash rate is already at a record-low 2% after the latest cut in August, it is still the highest in the developed world – a major draw for yield-hungry investors and a complication for the central bank as a higher kiwi further dampens imported-led inflation.

But with rapid rises in house prices flashing warnings of a bubble in the property sector, Reserve Bank of New Zealand Governor Graeme Wheeler took pains to balance his message to financial markets.

“We do not believe that the outlook and balance of risks warrants a position of no policy change, nor a position of rapid easings,” said Reserve Bank of New Zealand Governor Graeme Wheeler in a speech to businesspeople in Dunedin, the text of which was released on the bank’s website.

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The New Zealand dollar rose around 0.5% after Wheeler effectively reiterated the 90-day bank bill track – widely considered a proxy for interest rates – which was published in August and pointed to around 35 basis points of further easing.

At 2%, New Zealand’s cash rate is well above those in Britain at 0.25% and even Australia’s 1.5%.

With rates at near zero in the United States, and negative in Japan and Europe, the differential is a powerful lure for carry trades, in which investors borrow at ultra-low rates in currencies such as yen or sterling and buy high-yielding assets such as the kiwi.

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Despite 150 basis points of easing since June 2015 the New Zealand dollar is 2.5% higher on a trade weighed index basis than before the rate cuts started.

This is complicating Wheeler’s task of stoking inflation, currently running at 0.4%, well below the central bank’s 1-3% target range.

“They have quite a tough trade off between what they do with the cash rate and the impact on the exchange rate and what happens to the housing market,” said Westpac Bank Senior Economist Satish Ranchhod said.

While the central bank clearly plans to cut rates again, Wheeler reiterated that “rapid ongoing decreases in interest rates” would further inflame “an already seriously overheating property market.”

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New Zealand’s booming housing prices are now 45.4% above the previous market peak of late 2007, and officials warn the rapid increases pose a risk to financial stability. The central bank recently announced new macro- prudential tools aimed at curbing high-velocity house price growth.

S&P Global Ratings Tuesday said the economic risks facing financial institutions operating in New Zealand have heightened, partly due to continued strong growth in residential property prices.

While retaining its ratings on the financial institutions S&P noted “the risk of a sharp correction in property prices has further increased.”