tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Sunday, December 8th, 7:32PM

News

rss
Latest Headlines

Rates left unchanged over stimulus effect concerns

The Reserve Bank left the OCR rate unchanged at 3% and forecast limited rises over the next two years, citing concerns the low rate was failing to provide a boost to the economy with below average corporate investment intentions and a weak housing market.

Thursday, December 9th 2010, 12:00AM

by The Landlord

"While interest rates are likely to increase over the next two years, for now it seems prudent to keep the OCR low until the recovery becomes more robust," said Bank Governor Alan Bollard.

ASB economist Jane Turner said that while the rate decision was unsurprising, "the tone of the statement was more dovish than we had expected."

She said the big change in the statement "was less in the forecasts, but more in how the RBNZ is viewing the effectiveness of interest rates on activity."

"In observing the weakness in activity, the RBNZ has concluded that monetary policy settings are providing less stimulus to the economy  that previously assumed, and hence the substantial change in view on the interest rate outlook despite  the relatively unchanged view on medium-term growth," she said.

On the housing market Bollard said prices may decline further, which allied to business caution "suggests current low interest rates are having a less stimulatory effect than in the past."

JP Morgan economist Helen Kevans also highlighted the weak housing market.

"Thanks to a more cautious approach having been adopted by households, household spending remains soft, household credit flat, and housing market activity has eased, making it likely that house prices will fall further," she said.

Westpac markets economist Geoff Wilson said the RBNZ has responded to the weaker-than-expected economic activity, and while forecasting a reasonable economic recovery (3.4% growth in the year to March 2012), "wants to see hard evidence before acting."

Kevans said she believes the Bank will leave the OCR rate unchanged "until at least March next year" as "the poor run of economic data issues no sense of urgency to step away from current accommodative settings."

Turner believes the rate will remain unchanged until June and then only expects to see rises every three months in 2011 to coincide with Monetary Policy Statements. However, in 2012 "when the RBNZ becomes more confident about the recovery and wary of rising inflation pressures, we expect that rate hikes will become more frequent."

"We expect the OCR will reach 4.5% (where we assess neutral is) by April 2012."

On the positive side the Bank said New Zealand's trade activity continues to expand with strong growth in the Asia-Pacific region and better-than-forecast growth in the US and UK.

Kevan also highlighted reconstruction work in Canterbury after the earthquake (which the Bank said caused approximately $5 billion worth of damage to infrastructure, residential and commercial property), higher export volumes and commodity prices, and the Rugby World Cup as factors that would boost growth in 2011.

However, at present "there have been few bright spots in the economic space in New Zealand of late," she said.

« Economist pushes out dates for next OCR hikesFloating home loan rates tumble »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 4.94 - - -
AIA - Go Home Loans 7.49 ▼5.79 ▼5.49 ▼5.59
ANZ 7.39 6.39 6.19 6.19
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.79 5.59 5.59
ASB Bank 7.39 ▼5.79 ▼5.49 ▼5.59
ASB Better Homes Top Up - - - 1.00
Avanti Finance ▼7.90 - - -
Basecorp Finance ▼8.35 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.54 - - -
BNZ - Rapid Repay 7.54 - - -
BNZ - Std 7.44 ▼5.79 ▼5.59 5.69
BNZ - TotalMoney 7.54 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.69 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 6.95 5.79 5.59 5.69
Co-operative Bank - Standard 6.95 6.29 6.09 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - ▼5.99 ▼5.89 -
First Credit Union Standard ▼7.69 ▼6.69 ▼6.39 -
Heartland Bank - Online 6.99 ▼5.49 ▼5.39 ▼5.45
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.60 6.65 6.40 -
ICBC 7.49 ▼5.79 ▼5.59 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.25 6.89 6.59 6.49
Kiwibank - Offset 7.25 - - -
Kiwibank Special 7.25 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 7.94 ▼5.75 ▼5.99 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.49 6.95 6.29 6.29
SBS Bank Special - 6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 4.94 5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.19 6.49 ▼6.39 ▼6.39
TSB Special 7.39 5.69 ▼5.59 ▼5.59
Unity 7.64 ▼5.79 ▼5.55 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society ▼7.70 ▼5.95 ▼5.75 -
Westpac 7.39 6.39 6.09 6.19
Westpac Choices Everyday 7.49 - - -
Westpac Offset 7.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 5.79 5.49 5.59
Median 7.49 5.97 5.75 5.69

Last updated: 6 December 2024 9:11am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com