The Reserve Bank has been too timid in cutting interest rates and will have to ease by another full percentage point by the end of the year, Deutsche Bank says.
Wednesday, July 9th 2003, 3:41AM
by The Landlord
That is about three times as much easing as the money market is pricing in, but Deutsche Bank's chief economist, Ulf Schoefisch, believes the market is being too complacent about the exchange rate and what it will do to the economy.
Schoefisch, who recently returned from talking to institutional investors in the United States, says the fact that New Zealand has the highest interest rates in the developed world is not lost on them.
"At the moment they are looking for yield so interest rate differentials are playing a big role [in the exchange rate]..."
