By the looks of much rhetoric being espoused in the press lately it appears that we have returned to the old days of “property bashing” again.
Saturday, October 11th 2003, 5:16AM
by The Landlord
Property has again become the whipping boy and is being blamed for all sorts of evil effects on our economy like the need for interest rates to increase. STOP RIGHT THERE!
We all know the Reserve Bank is dead against house price inflation (and has been for over a decade) because they believe it leads to real inflation increases which then again impacts on even higher house price inflation. And so the RBNZ continues with it’s “head in the sand” attitude that house price inflation is evil which apparently forces them to hold up interest rates to the extreme detriment of the whole NZ economy.
Tut, tut you bad property investors and home owners! But wait a minute. Lets look closer at the cause and effects at play here. Over the last 2 years the Reserve Bank has been ever so slow and reluctant to reduce wholesale interest rates in spite of an ever strengthening NZD which has certainly been strengthened to a degree on the back of the interest rate differential. Here is the evidence...
