Following today's Reserve Bank OCR review, wholesale interest rates have fallen sharply.
In fact, the 1-5 curve has gone negative.
The 2-10 curve is just positive at only +7 basis points.
It is likely these moves will flow through to retail interest rates fairly soon if the changes hold.
That means,
- fixed mortgage interest rates will fall
- longer term home loan rates may fall faster
- term deposit rates will almost certainly now fall along with savings rates.
One consequence of the interest rate falls may be that a mortgage payment will support a larger loan. That in turn may boost offer prices on housing.
Another consequence has been that the New Zealand dollar has fallen. One NZ dollar is now worth US73.2 cents, a drop from US75c last night and down from US78c at the beginning of the year.
If that holds that will put upward pressure on the cost of imported goods.
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