The Reserve Bank (RBNZ) has opted to hold the Official Cash Rate (OCR) at 5.50% for a sixth time in its April review.
The RBNZ’s Monetary Policy Committee said the economy was evolving as anticipated with high interest rates reducing capacity pressures and inflation. The Committee reached a consensus to keep the OCR unchanged, the RBNZ said.
A restrictive policy position was still necessary and would allow consumer price inflation (CPI) to return to the 1% to 3% target range before the end of 2024. Statistics NZ releases its March quarter CPI Index next Wednesday, April 17. For the December quarter CPI came in at 4.7%, down from a peak of 7.3% in the June 2022 quarter.
The RBNZ said global economic growth was below trend but most major central banks were cautious about easing policy given the ongoing risk of persistent inflation.
Economists had universally expected the RBNZ to leave policy unchanged, but some commentators have called for interest rates to be cut sooner rather than later.
An influential business survey released on Tuesday showed business confidence was weak and firms were letting go of staff. Pricing intentions were also falling.
The record of the April meeting said the Committee thought the economic slowdown was in line with what was expected in the central bank’s forecasts, published in February.
Gross domestic product data was “close to expectations and implies a continued easing in capacity pressure in the economy,” it said.
“Some higher frequency indicators suggest a modest recovery in activity in the first quarter of 2024. However, measures of business confidence have declined and firms’ own expectations for activity and investment have weakened”.
The Committee said the March inflation data could be higher than forecast, although it would likely be due to volatile components such as domestic airfares and overseas accommodation.
Members agreed there was “limited tolerance” for any delay to headline inflation returning to the target band.
There were still upside risks to the inflation outlook due to persistent services inflation and the possibility that goods prices wouldn’t fall as expected.
“Anticipated near-term increases to local government rates, insurance, and utility costs, could also further slow the decline in headline inflation,” they said.
On the downside, they noted restrictive policy in the context of weak global growth could cause inflation to fall more rapidly than forecast.
“Business and consumer confidence remain particularly weak which could lead to more unemployment and financial stress than expected,” they warned.
Challenges in the Chinese economy also posed a risk to both the global economy and New Zealand’s trade outlook.
However, the balance of risks was broadly the same as when the Committee met in February and restrictive monetary policy settings were still necessary to reduce inflation.
The OCR has been held at 5.50% since May 2023, after a dozen consecutive hikes which lifted the benchmark rate from 0.25% in just under two years.
Economic activity and headline inflation have both fallen faster than was forecast then, but employment and non-tradable prices have been stronger than expected.
The RBNZ has forecast headline inflation to fall below 3% in the September quarter of this year, and suggested the OCR could be lowered from 2025.
'The shortest statement we've ever seen'
Kiwibank Chief Economist Jarrod Kerr said this RBNZ statement was the shortest one Kiwibank's economists had ever seen at just 140 words.
"The RBNZ were never going to adjust policy today. And the likelihood of a change in May is very slim (to none). Some in the market are calling for cuts to commence in August. That’s premature in our view. Although we’d love to see it," Kerr said.
"We think they need to see inflation below 3% before they will contemplate cuts. And the earliest that will happen is October, when the third quarter inflation report is published. So that means the first reasonable chance of a rate cut is November."
ANZ NZ economists Sharon Zollner and David Croy also described the RBNZ's statement as the shortest they'd ever seen. They said the RBNZ saw nothing to cause a deviation from the central bank's “watch, worry and wait” stance, and thus didn't take a strong stance on when OCR cuts might come.
"All told, today’s review was a placeholder, as expected. Kudos to the RBNZ for efficiently issuing the shortest policy assessment ever seen so we can all get back to watching, worrying and waiting," Zollner and Croy said.
"We continue to expect that the RBNZ will require considerably more certainty before contemplating cuts. Current upside risks on the tradable inflation front got very little airtime in RBNZ comments, but they do highlight the fact that headline CPI inflation is still a long way from where it needs to be. We continue to expect [OCR] cuts won’t be on the table until 2025."
The RBNZ's full statement is below.
OCR 5.50% - Official Cash Rate remains unchanged
The Monetary Policy Committee today agreed to leave the Official Cash Rate (OCR) at 5.50 percent.
The New Zealand economy continues to evolve as anticipated by the Monetary Policy Committee. Current consumer price inflation remains above the Committee’s 1 to 3 percent target range. A restrictive monetary policy stance remains necessary to further reduce capacity pressures and inflation.
Globally, while there are differences across regions, economic growth remains below trend and is expected to remain subdued. However, most major central banks are cautious about easing monetary policy given the ongoing risk of persistent inflation.
Economic growth in New Zealand remains weak. While some near-term price pressures remain, the Committee is confident that maintaining the OCR at a restrictive level for a sustained period will return consumer price inflation to within the 1 to 3 percent target range this calendar year.
Summary Record of Meeting – April 2024
The Monetary Policy Committee discussed recent developments in the New Zealand and global economies. The Committee agreed that the New Zealand economy has evolved largely as expected since the February Statement. Restrictive monetary policy is contributing to an easing in capacity pressures to ensure inflation returns to target.
Economic growth in most of New Zealand’s major trading partners has been below trend. However, this has varied across regions, with stronger activity in the United States compared with the Euro Area and Australia. Economic growth in most major economies is forecast to slow further over 2024. In China, policymakers have announced a similar growth target for this calendar year, which may be difficult to achieve amid ongoing structural challenges.
The Committee noted that in most major economies the better balance between the demand for, and supply of, labour has been reflected in a decline in job vacancies. However, growth in unit labour costs remains elevated. Inflation will continue to be persistent in regions where higher labour costs have not been accompanied by improved productivity or reduced profit margins.
Most major central banks remain cautious about easing monetary policy given the risks of inflation persistence and elevated inflation expectations. Financial market pricing for most central bank policy rates continues to imply some easing later this year, although this has lessened over recent weeks. Participants in global financial markets continue to exhibit strong confidence in the corporate earnings outlook, as reflected in equity prices and credit spreads.
Aggregate commodity price indices have remained relatively stable despite ongoing geopolitical uncertainties. Oil prices have increased while agricultural commodity prices have generally been weaker. The recent spike in global shipping costs, which has partially receded, has yet to be observed in New Zealand merchandise trade data. This timing is consistent with information from discussions with businesses that suggest shipping contracts in New Zealand are typically renegotiated every three to six months.
The Committee discussed domestic economic data released since the February Statement. Gross Domestic Product for the December 2023 quarter was close to expectations and implies a continued easing in capacity pressure in the economy. Some higher frequency indicators suggest a modest recovery in activity in the first quarter of 2024. However, measures of business confidence have declined and firms’ own expectations for activity and investment have weakened. Near-term business pricing intentions have declined but remain elevated, in part reflecting an uptick in both realised and expected costs.
The Committee noted that recent monthly Selected Price Indices (SPI) imply some upside risk to the March 2024 quarter Consumers Price Index (CPI). The Committee agreed that there was large monthly variability in the SPI series and noted that recent relative price changes are due mostly to volatile components including fuel, domestic airfares, and overseas accommodation.
The Committee noted the continued strength in net migration, which is supporting aggregate consumer spending and rising dwelling costs. While the rate of net migration has declined from its recent peak, there have been significant upward revisions to recent historical data. Net migration also adds to labour supply in the economy and has helped to alleviate capacity pressures. Members noted the large decline over recent quarters in the share of firms reporting difficulty in finding labour.
The Committee discussed the outlook for fiscal policy and its implications for monetary policy. Based on the most recent published forecasts in the Half-Year Economic and Fiscal Update, and the commitments outlined in the Budget Policy Statement, the Committee noted that government expenditure is indicated to decline as a share of the economy in coming years.
Domestic financial conditions have eased marginally since the February Statement with declines in wholesale interest rates and the New Zealand dollar. There have been modest reductions in retail interest rates. However, these remain consistent with the Committee’s restrictive monetary policy stance, with credit growth remaining subdued. The Committee noted that despite a reduction in wholesale funding costs, term deposit rates were little changed reflecting increasing competition for retail deposits.
The Committee discussed whether recent developments in the New Zealand and global economies had implications for when inflation returns to target. Members agreed that there had not been a material change since the February Statement and that monetary policy settings continue to constrain demand broadly as expected. Members agreed that there remains limited tolerance to increase the time to achieve the inflation target while inflation remains outside the target band and while inflation expectations and pricing intentions remain elevated.
The Committee discussed upside risks to the inflation outlook. Members agreed that persistence of services inflation remains a risk and goods price inflation remains elevated. Anticipated near-term increases to local government rates, insurance, and utility costs, could also further slow the decline in headline inflation.
The Committee discussed downside risks to the inflation outlook. Members noted that ongoing restrictive monetary policy in an environment of weak global growth could lead to a more rapid decline in inflation than expected. Business and consumer confidence remain particularly weak which could lead to more unemployment and financial stress than expected. Structural challenges facing the economy in China remain a concern given its importance for the global economy and for New Zealand’s trade.
Overall, members agreed that the balance of risks was little changed since the February Statement. Ongoing restrictive monetary policy settings are necessary to reduce inflation, while avoiding unnecessary instability in output, employment, interest rates and the exchange rate.
In discussing the appropriate stance of monetary policy, members agreed they remain confident that monetary policy is restricting demand. A further decline in capacity pressure is expected, supporting an ongoing decline in inflation. The Committee agreed that interest rates need to remain at a restrictive level for a sustained period to ensure annual consumer price inflation returns to the 1 to 3 percent target range. On Wednesday 10 April, the Committee reached a consensus to keep the Official Cash Rate at 5.50 percent.
Attendees
MPC members: Adrian Orr (Chair), Bob Buckle, Carl Hansen, Caroline Saunders, Christian Hawkesby, Karen Silk, Paul Conway
Treasury Observer: Tim Ng
MPC Secretary: David Craigie
*Additional reporting Gareth Vaughan.
129 Comments
Reading through the summary of the meeting, they seem pretty intent on getting inflation back to the mid-point of the range and that the damage to the economy was the expected price to pay.
It prompted me to go back to the previous MPS in Feb, this shows that they expect to get the CPI back between 1-3% in Sept 2024, but not cut the OCR until Jun 2025.
This recession is going to be a doozy
Also trademe doesnt give a real representation of available rentals as almost no one removes them once they are taken, they just eventually expire. For example I saw about 70 but only 10 seemed to have upcoming viewings and I did 7 or so viewings in lower hutt late last year, applied for two and was accepted for one.
Im really concerned about the disposable income that could be spend in the economy instead lost forever to the banks(cancelling the credit creation) on monstrous loans. It seems 'the system' wants the credit creation, Im not sure what happens if you tighten the lending to 4 x DTI whether you have constant recession.
Indeed. It exposes the biggest weakness of the banking housing ponzi for specuvestors....a lack of actual tax paid capital. Banks will lobby hard against meaningful dti. It wojld hit them hard in what they can actually lend, and the fuels a price retrenchment due to leverage limitation.
If only Orr could do his job...
Higher for longer too .....then wait till a barrel of Brent crude hits $100 ....inflation will be up again and we are back to square one.
Stagflation is definitely on the way..... the Cor-pirates will still increase prices, to ensure they make a profit .....the banks can play around with their interest margins, because they are going to do exactly what they want ....while the people that will lose out, are the consumer and small business, because their disposable income and margins will be reduced even further.
Mortgage repayments will increase and renters will pay more .....but as long as our beloved multiple property investors are all OK, everything will be fine and dandy :)
All of this could of been mitigated by keeping house prices under control ....but as NZ is a tiny, greedy little country, way down the bottom of the Pacific, groups with "vested interests" will rule......UNTIL the system collapses...and what that looks like is "your guess is as good as mine".
As predicted, go low and go long. The RBNZ should have slammed he 6.5% to 7% brakes on and then started gradually dropping as inflation dropped.
Instead they have decided to only raise the OCR to 5.5% in the hopes that this will be enough, over a long period, to combat the 7.3% interest peak.
Translation "All those now financially stressed people that I Spruiked into property throughout the absurd heights are now acceptable collateral damage"
Yet, you once retorted that none of these people regret their decision to buy (simply on account no-one has poured their heart out on this forum)
You suffer from Empathy Deficit Disorder.
You have to remember that RE agents only get paid on churn, it doesn't matter to them whether the market is going up or down, they are serving their client's interests by selling.
There is nothing worse for a RE agent in a market that isn't moving.
Having a stable housing with the need for 1/2 the housing churn would decimate (actually would probably half the need for agents) their industry.
Yes they don't really care what houses sell for, just that it sells. Hence the standoff between delusional owners wanting 2021 prices, and buyers only able to access 2016 price level money. Budgets will continue to tighten on RE offices and would not want to be a supplier to one of the big firms right now.
Tothepoint, unfortunately for some, that prediction turned out to be true. It's not something to skite about. Having worked in banking throughout the 90s recession, I experienced first hand the fallout of these episodes of expensive money and falling asset prices. It takes a toll not only on peoples finances but their mental health.
Just because I make such predictions doesn't mean I wish suffering on others.
"I worked in banking from 87 to 97"
Just out of interest, what area of banking were you in?
1) Commercial banking - consumer lending, commercial lending
2) Finance company - consumer lending vs commercial lending
3) Investment / merchant banking - government privatisations, capital raising, M&A,
4) broker / dealer - FX (dealing vs trading), public equities (dealing vs trading), fixed income (dealing vs trading), futures & options (dealing vs trading),
5) other
"i witnessed first hand the fallout of the 90-91 recession"
The economic fallout from the commercial property bubble of the late 1980's, the 1987 stock market crash, and floating of the NZD. This led to the recapitalisation of BNZ (twice), failure of DFC, and other corporate failures such as JudgeCorp, Chase Corp. The unemployment rate peaked at over 11%.
You would have some fascinating stories to tell from that era.
Yes, I do have some stories to tell!
I was in consumer lending. It did a stint in the front end assessment of credit applications then on the rear end (debt recovery once written off)
It's was indeed a real eye opener. I was self educated earlier on to get ones finances on very solid foundations. It was both the best and worst of times as the journey involved a few company restructures as well.
I was in my early 20s, speculating hard out on shares. At the height, I was 20K up, got out a week before it all crashed and ended up breaking even. I used to walk down and watch the chalkies going hard at it through the viewing window in my lunch breaks. I was fascinated with it all.
In the 80s, as a renter, the last thing I wanted was a mortgage. I had the freedom to move around. After all the dust settled and while still mourning the loss of the $20K that was just paper and seeing the widespread suffering that ensued, I began re-evaluating a lot of things I once took for granted.
I cannot recall noting the income ratios to house prices at the time, PE ratios were more my thing. Although, much like todays house price/income and rent ratios - fundamentals mattered little when greed took over. It was the herd fueled momentum.
From the headline “return inflation to the 1 to 3% target for 2024. Don’t believe it. Almost a third of the year is gone. Such utterances from this bloke have no more than credibility when in concert with Finance Minister Robertson and the then PM they harped on and on with unctuous assurances that the rising inflation was only transitory.
Post GFC AND post a global PANDEMIC.
Jamie Dimon said there is potential for a further 3% rise in interest rates in the USA and stagflation. Reckons there is a ton of probable black swan events that will impact the coming months / year too - think more wars, climate-change, AI job demolishment, energy prices, trump election, china trade war (e.g. EVs).
Reserve banks need to be very cautious at present and leave themselves a lot of scope to move if events dictate it. No sense dropping rates too soon... gotta let the markets adjust to a sensible rate.
Suggest your data set is to narrow. It missed the extended period from the mid 70s to early 90s where rates were consistently over 10% and peaked at around 20%. A period caused by excess money supply bloating asset prices and hyper fueling inflation.
Sound familiar...
Anyone feel like the sh1t is heading towards the fan? I predict house price falls over winter and more big job losses... what a pigs ear the RB made of Covid..this is just the start of the hangover.
Kitchen renos have already been put on hold based on my water cooler interactions
Oh how I miss kitchen and bathroom alteration work. What used to be almost a weekly occurrence from 2016-2021 has dried up completely. I’ll have electrical apprentices become qualified later this year having never undertaken renovation work. Unemployment rates have only just begun. 7% this time next year
I'm waiting for the plumbers and builders to get hungrier. I don't think its quite sunk in yet that they need to sharpen their pencils to get work. This applies to New Plymouth.
Investigating some survey work and not impressed with a cost of what i want done with one surveyor. I have some knowledge of what's required and how long it'll take. Still gilding the lily.
Lots to unpack there but will leave it to others more knowledgeable than me. But,
There were still upside risks to the inflation outlook due to persistent services inflation and the possibility that goods prices wouldn’t fall as expected.
There's the 'no sh*t Sherlock' moment from the wise ones. Let me put it to the pointy heads and the inner circle that when businesses think about their viability they do it based on a minimum level of acceptable margin. Given that many NZ SMEs operate on high margin - as one has to in an economy with high-cost structures with relatively small addressable market - it becomes very difficult to reduce prices. Orr has lost all his bravado and it's clearly obvious that these people believed in the bubble model with its wealth effect and attachment to SMEs. Now chickens are coming home to roost and they don't really have an answer.
f local tourism is considered an export industry (overseas ppl pour money into our economy) then the reverse should also hold true.
I don't think so. As far as I'm concerned, the CPI measures price changes in goods and services in the NZ economy.
You can make the argument that the cost can be borne within NZ economic boundaries - for ex, purchasing through a travel agent. Perhaps I'm an outlier because I don't use travel agents. I'm surprised the international travel services industry like travel agency is still so big.
I support today's decision. However, I am growing more anxious that there are components of the inflationary data that are quite insulated from the OCR settings. It is this data that may cause a dislocation between the actual economic activity and CPI. The CPI is a surrogate of economic activity only. Insurance costs rising secondary to natural disasters for example is not going to respond to higher OCR settings but if it keeps the CPI above 3% will support a higher cash rate than is suitable for the economic activity.
Not just wages but pensions and retirement savings etc
People need to be able to afford to live - which is far more important than driving house prices up by dropping rates. Let house prices fall, wages recover, adjust tax brackets ... and the overleveraged and RE industry will adjust to a new normal or need to reset.
New government seems to be realising the impact of immigration on housing and infrastructure/public services.. so if we scale back immigration at the same time pressure will be right off housing and we will have enough to go round... and capacity in building can e used to buidl social housing for those that really need it (and by adjusting settings so lots of the people that are on benefits get jobs... at the same time we free up houses and reduce its cost.. we need less social housing.
A good economic reset that favours stability, personal accountability and a brighter future for NZ - driven by pricing debt at sensible levels and getting lazy people off to work.
Like your style but you deliver that casually so it comes across as a bit of the ol' 'common sense.' Therefore, someone will relegate such thinking to the talkback radio classification.
As you allude to, what if incomes remained stable and prices fell? Is that necessarily a bad thing? Sure, h'hold debt to income would stall and eventually fall. Of course if incomes were to remain stable or even fall, you cannot keep pumping the money supply and people would have to live within their means. But I guess not having that scenario is why we're in the current mess.
Agree. We all seem to live in permanent fear of GDP falling (if we cut immigration and prices/salaries fall GDP would presumably drop quite fast) ... which would hit tax take.. which would force central and local govt to live in their means - hopefully.
We live in a world where we have all been trying to facilitate as low as possible a cost borrowing to give everyone what they want ... when what we need is constraint so people are forced to live with what they have today or earn more with what they have available to the now.
We all seem to live in permanent fear of GDP falling (if we cut immigration and prices/salaries fall GDP would presumably drop quite fast) ... which would hit tax take.. which would force central and local govt to live in their means - hopefully.
Would GDP falling not hit the FX market and impact our dollar, thus impacting imported inflation? Surely the GDP fear is more related to global perception and the impact on foreign investment also?
Which all makes sense. However it means that we continually have to make bad strategic decisions about our economy to defend our dollar and protect against imported inflation.
I accept that it's a global thing also.. driven by how we chose to make economies work.. but it's now starting to choke our society in so many ways.
If we were find a way to focus less on GDP growth ... then we can start fix a lot of what's broken. We are quite a small economy.. maybe we could look for alternate ways of attracting inward investment into a longer term plan...
If we keep going this is going to be a horrible place to live for the next gen
Because its much better to have continuous micro adjustments than occasional massive changes due to politicians intransigence
1984: 20% devaluation
https://teara.govt.nz/en/video/23969/devaluing-the-dollar#:~:text=In%20….
https://www.stuff.co.nz/national/politics/300046021/adrian-orr-puts-eve…
From June 2020.
Aged well.
But one of the things on Orr's mind is that the economy will eventually have to wean itself off the enormous amount of monetary stimulus.
“How do you wean yourself off immediate triage-type things into more sustainable long-term policies that are going to create that real growth?”
It certainly sounds like the OCR will not be dropping this year. Not great news for those with large housing debt. In saying that no one made them sign the dotted line. Unfortunately greedy agents and mortgage brokers had a lot to say as well as those silly parents , friends and work colleagues who encouraged people onto the ladder with those well used words. “you never miss out when you buy property”. These people were trusted by their children and work mates some of whom are currently in a right pickle. I just wish some of those so called experts would just shut up occasionally.
Unfortunately greedy agents and mortgage brokers had a lot to say as well as those silly parents , friends and work colleagues who encouraged people onto the ladder with those well used words. “you never miss out when you buy property”.
Yes, those greedy boomer parents and landlord friends didn't do anyone any favours, but I first and foremost blame the economists, bank risk managers who allowed those ridiculously high loans, and self-proclaimed property experts like Ashley Church.
Tony Alexander deserves special mention here: an (supposedly) independent economist, an ex-CEO of BNZ with childhood memories of his father's residential building company going under in 1978, surely he would understand the housing market like no other? Yet, he was constantly egging on the lemmings to jump while surely he should have known better!? What an absolute disgrace.
Tony Alexander deserves special mention here: an (supposedly) independent economist, an ex-CEO of BNZ with childhood memories of his father's residential building company going under in 1978, surely he would understand the housing market like no other? Yet, he was constantly egging on the lemmings to jump while surely he should have known better!? What an absolute disgrace.
A bank economist for all or most of his career so would you expect anything less? He's selling on behalf of his employer.
"He's selling on behalf of his employer. "
He is now selling subscriptions to his newsletter, advertising in his newsletter and other paid speaking and promotional activities / engagements
a) Subscriptions at $150 per year
TView Premium, Tony Alexander Expert Economics Research Information
b)
"I have no idea which developers are most at risk. But the fact that five have contacted me recently to enquire about me making presentations for them, accepting their advertising, and writing material for them when none ever have before,"
He has been right almost his entire career with the advice of "Property never loses", most people that followed his advice made good money. Compared the a DGM from this site (e.g. Bernard Hickey), most followers missed out on $$$. Hard to know who is the bigger disgrace?
He has been right almost his entire career with the advice of "Property never loses", most people that followed his advice made good money.
If property never loses, then why are REITs underperforming the cash rate and other asset classes? Let's take the Smartshares NZ Property ETF. Investor Returns (after fees, after tax 28%) have returned 1.29% over the past 5 years.
How do you call that "making good money"?
He's been wrong for the last 3 years, and right for a long time before that. Compared to some DGMs that were the opposite.
Actually using the example I gave, the fund has returned 7.3% over 8 years since its inception in 2016 with a dividend yield of 4.5% before tax and expenses.
Inflation-adjusted you would likely be negative (the CPI is not inflation).
Can you point to a NZ REIT that supports TA?
If you bought a house 10 years ago because TA said it was a good idea, after 10 years of increasing rent and the tax free capital gains, you’ve done pretty well. TAs advice is unary, that property is always a great investment. While it’s very poor logic and terrible for house prices, it’s actually been a good investment strategy. Until now that is.
If you bought a house 10 years ago because TA said it was a good idea, after 10 years of increasing rent and the tax free capital gains, you’ve done pretty well. TAs advice is unary, that property is always a great investment. While it’s very poor logic and terrible for house prices, it’s actually been a good investment strategy. Until now that is.
Pretty much the same narrative across the Anglosphere. But it doesn't prove "you can't go wrong with bricks and mortar" and we know why that is. If 10 years ago TA explicitly said that the price of money will be suppressed and the money supply will be expanded through mortgages then I would agree with you.
I very much doubt he said anything like this.
How is someone a DGM for pointing out that our rockstar property ponzi is simply unsustainable, that investment in property at all costs is not a long term benefit to NZ as a whole?
"Property" wins and people and society lose is not a healthy result.
Is easy to see who and what is the biggest disgrace.
As its not possible to judge the top of a market best to sell when the trend is still upwards, same buying when the trend is still down better to crystalise profits and miss the last bit than try selling when the market has turned and buyers act like vultures and Banks close their doors to mortgage applicants.
Are you sure it is the dead wood that is being cleared? Or is it just the young saplings that may rise to threaten the older wood?
Recessions favor the big and already well established. But just because they are big and well established doesn't mean they are good.
"And if Tony & Ashley worked for the White Star Line shipping company, they would still be trying to sell tickets on the Titanics next voyage even as the bow sunk below the waves..."
Property promoters with their vested financial self interests
There will always be someone telling you to buy now. Property promoters will always tell you to act today due to their vested financial selfish interest.
When house price risks in the residential property market are high, that is the equivalent of walking in front of a fast moving car. It is better to wait until the life threatening danger has passed before moving.
The property promoter doesn't see or care about the approaching fast moving car (and potentially life threatening danger to owner occupier buyers). The property promoter is primarily focused and concerned with receiving their toll which owner occupier buyers only pay if they choose to cross the road. Many property promoters will tell you that there is no danger in crossing the road. Owner occupier buyer's safety is the last thing on their mind. If you're an owner occupier buyer, your safety should be the first thing on your mind.
CAVEAT EMPTOR
People who fail to learn the lessons of history are doomed to repeat them
https://inquiries.oireachtas.ie/banking/hearings/julien-mercille-on-the…
Spruikers hold onto the belief the powers that be will go to great lengths to protect this housing ponzi. While to a certain degree this is true, the elephant sized difference this time around is our economic cycle is out of step with others that have considerable influence on, not only the global price of money, but also our currencies value should we try and cut too early. A cut too soon could result in unintended consequences for our already anemic economy.
Lets keep it real.
Decides to throw away $12 on a Powerball ticket .... and ponders if NZD 26 Million will be enough to live the 'good life' in NZ.... recalls the Zimbabwe 100 Trillion dollar note being worth just USD .40 cents.... Wonders if you can get Lotto to payout in USD...lol
It's the 40,000 or so businesses that employ between 6 and 19 employees each are the ones that you have to watch. Each one of them cutting one or two staff is not going to make any headlines. But cumulatively there are about 400,000 employees whose jobs are under threat. The owners have their company debts, overdrafts secured against their own property. The interest on that debt is unrelenting. Lose your assets or let someone go? It's a choice they will make. Guess which way it will go.
Also it's much easier when everyone does it at the same time as everyone is confident that if the economy/business recovers they can hire back good caliber previously employed people. They may even get someone better than who they let go.
Kainga Ora bailing out projects to make sure tradies get paid?
Kāinga Ora takes over four of Build Partners’ apartment jobs - NZ Herald
There is a lot of gloom in these comments. My take on it is more positive. Clearly we are at peak interest rates. Inflation is tracking down and the RBNZ expects it within the band by the end of this calendar year. Rate cuts are coming. The Fed will move soon enough. For those struggling (seemingly much to the glee of some here) they just need to hold on for a bit longer. The picture could look quite different come December 2024.
Agree, yep we are in for a real rough patch and there will be more blood on the floor, but it’s an economic cycle…rates won’t probably drop crazy low again but they will drop and allowing for the wage growth we’ve had the neutral rate will find an equilibrium and life goes on…hey, or these fellas are right and we end up in some kind of post apocalyptic wasteland and the spruiker vs DGM war can move from keyboard warrior stuff to sh*t gets real in the street…🤷🏻♂️😂
If the two year was 5.85% then the majority refixing at that point are going onto lower rates, wage growth will stall but it’s been pretty chunky over the last couple of years so household incomes are higher. House prices could easily drop another 10%, listing numbers through the roof and funding still hard to get has to be a perfect storm…but as always we won’t build enough houses over the tightening period so at some point house demand will grow and then prices will rebound, probably won’t “double every ten years” but it’ll get back up again. ‘24 will be brutal, some will fall over, if folks can get through it then I do believe there is light at the end of tunnel…or not, no one’s crystal ball is working too good lately eh
I've read, and re-read, the statement about 10 times now - with big gaps in between so I read it again with a more balanced perspective - all the while trying to convince myself that the RBNZ knows what they are doing.
But the constant references to what is happening overseas with little to no reference to what is happening in NZ makes one thing very clear ...
The RBNZ's MPC is totally at a loss as what needs to be done !!!
Consequently, they do nothing. And justify doing nothing by pretending everything is playing out as they expected.
Sorry. This is b.s. of the highest order. Things are NOT playing as they predicted. They're worse. Much worse!
Want an example? Just look at where they think GDP is going now vs what they forecast in graph 3 above.
How can anyone believe that? That solid blue line isn't going to magically reverse its trend down and suddenly start trending up. It will continue trending down! And I'll add that it is already below where they predicted it would be!
Jfoe is going to be right.
By May, the sticky brown stuff will be flung everywhere by the spinning whirly thing and the RBNZ will have to start easing. They simply won't be able to ignore the damage they've done. And neither will we.
What have Kiwis done to deserve such ineptitude?
Worst central bank ever? Probably!
Massive number of mortgages rolling over to the final peak figure over the coming months, its going to be pretty painful for a lot of people and job cuts coming out there as well. The bottom line is things could get really ugly out there very fast and whether cuts come in May or August is neither here or there but I cannot see the current rates lasting until the end of the year.
We knew this from 2020 when they held the OCR too low for too long and doubled down on stimulus with LSAP and FLP on top of the COVID payments from govt. The tone you recognise is reminiscent of Robbo and Cindy, blaming everyone and everything else while boasting how well they are doing instead of taking ownership, making hard decisions and moving forward.
The only silver lining I can see, is maybe the damage will be so obvious, that people will start questioning this dopey OCR model we have, and its ability to be 1) responsive and 2) targeted.
And we have a government committed to austerity which will just exacerbate the pain.
What a complete load of Bollocks does this guy think we are actually that dumb we believe what comes out of his mouth. The country is broke it has the biggest debt ever ,they are printing 1 Billion a week just to stay afloat and the only reason this clown lifted the OCR from .25% to 5% is so that he can decrease so everyone feels good. Very hard to decrease at .25%.
Just remember its a huge controlled Ponzi scheme and if you havent got asetts that produce an income you are up shit creek.
Good Luck
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