Judith Collins says National would strip the Reserve Bank of any responsibility to consider the unemployment rate when making monetary policy decisions.
She thinks this could help rein in runaway house prices, by allowing the bank - which operates independently to the Government - to ignore the effects raising interest rates could have on employment.
"We've seen for the first time in 30 years the Reserve Bank now doing things other than simply controlling the supply of money by interest rates," Collins told The AM Show on Wednesday.
"They've had this extra mandate put into them around employment, and that's one of their drivers and what they're doing. People might say 'that suits me...' but when you can't even afford a house, that's a big issue."
House prices have risen almost 20 percent in the past 12 months, 14 times faster than inflation.
Since 2018 in addition to keeping inflation between 1 and 3 percent, the Reserve Bank has been mandated to support "maximum levels of sustainable employment" in its decision-making.
When economic times are tough, it typically lowers interest rates to keep borrowing and investment up - many experts (including former Finance Minister Sir Michael Cullen) have said record-low interest rates over the past decade however have contributed to rampant house price inflation, with Kiwis borrowing to speculate on the property market instead of putting that money into productive businesses.
If the Reserve Bank raised interest rates to cool the housing market, that could decrease investment elsewhere - which could lead to job losses, which goes against the 2018 directive from Finance Minister Grant Robertson.
"Remove that mandate around the employment side," said Collins. "[Employment] is a good thing, but also that's not the job of the Reserve Bank, traditionally. We'd certainly be thinking very carefully around the mandate of the Reserve Bank."
Earlier this week National's new number three, shadow treasurer Andrew Bayly, called on Robertson to direct the Reserve Bank to put conditions on new money it's loaning to banks at ridiculously low interest rates.
"Our view is that the Reserve Bank can, and should, be requiring banks to direct new funding from the Reserve Bank into productive parts of the economy, particularly business lending," he said.
"It's likely the new funding will flow straight into the already unaffordable housing market."
Collins said rather than interfering with the bank's independence, Bayly was just doing Robertson's job - and if she was in charge, a "conversation" would be had with Governor Adrian Orr about possibly raising interest rates.
"House prices are continuing to rise for the same houses - it's not like there's something magically done to these houses."