It's been three months. And it's been too long*. But this coming week we finally get the Reserve Bank's latest definitive view on how we are doing in the war with inflation and whether another interest rate hike is on the menu.
On Wednesday February 28 the Reserve Bank (RBNZ) releases its first Monetary Policy Statement (MPS) for the year and the RBNZ Monetary Policy Committee will decide whether or not to change the Official Cash Rate, which has been at 5.5% since May 2023.
It's fair to say that for the first time since May of last year the upcoming rate review is a 'live' one - with a real chance we may see a hike.
The prevalent view though, is that the OCR will be left unchanged. Nobody is, to the best of my knowledge, picking a cut. Notably economists at the country's biggest bank ANZ are swimming against the tide with a pick of a 25-basis-points hike, followed by another at the next review in April, taking the OCR to 6%. And the ANZ economists cite a key quote from the last OCR decision on November 29 that: "If inflationary pressures were to be stronger than anticipated, the OCR would likely need to increase further."
No doubt the language from the RBNZ has been tough and uncompromising - and the 'hawkish' nature of the comments at that November review surprised everybody.
So, where do we stand?
For the record, here is an abridged version of the key forecasts contained in the RBNZ's November MPS (the shaded, emboldened bits are the RBNZ's forecasts):
Since the last OCR hike in May of last year there have been four consecutive 'no change' decisions by the MPC. So, another 'no change' in the coming week would make five on the bounce.
Much has happened since the last OCR review at the end of November, so, I will cherry-pick what I see as the more salient developments that will likely most influence the RBNZ's February 28 decision.
Remember, the RBNZ aims to get inflation within 1% to 3%, with an explicit target of 2%. And Governor Adrian Orr has reiterated that he sees this approach - with the focus on 2% - as still the best way to go.
In terms of what the RBNZ has expected to happen with economic developments since last November, there's been a bit of what economists like to call 'unders and overs'.
Significant in the 'unders' category was the shock 0.3% contraction of the economy in the September quarter (versus, as you can see above, the RBNZ's pick of 0.3% growth). Significantly also, that GDP announcement, put out by Statistics NZ on December 14, was accompanied by substantial revisions to earlier GDP figures, including the revelation that we had a 'technical' recession earlier in the year.
Against that, while 'headline' annual inflation for the December quarter came in at 4.7%, down from 5.6% and against an RBNZ pick of 5.0%, the so-called 'non-tradable' (domestic) inflation was 5.9%, down from 6.3%. And that 5.9% was HIGHER than the RBNZ's pick of 5.7%.
Also, unemployment's rising much more slowly than anyone's been picking, going up from 3.9% to 4.0% in the December quarter - when the RBNZ picked 4.2%.
But a number of more recent, lower-level, economic results have very much gone the way of the RBNZ. Included in this has been the latest monthly Selected Prices Index (SPI) data (covering about 45% of the items in the official measure of inflation the Consumers Price Index). The SPI showed annual food price inflation down to 4.0% - its lowest level since late 2021 - and also sharp falls to the ever-volatile airfares. Rents are rising though, which will be of concern.
The RBNZ pays a lot of attention to its own Survey of Expectations, and the latest results were the most favourable for the RBNZ in recent memory - with inflationary expectations down right across the board.
Going completely contra to that, however, was the results just on Thursday in the past week (February 22) of the RBNZ's latest Household Expectations Survey, which showed that while households expected inflation in the next 12 months to be lower than they expected in the previous survey three months ago (but they still saw inflation being 5.1% in 12 months' time), expectations of inflation for both two years and five years time actually ROSE. Not what anybody wanted. And a bit of a late shock for the RBNZ, I would bargain. How much weight might the RBNZ put on this survey? Traditionally it didn't. But it has extensively revamped it and does appear to have been seeking to give it a bigger profile recently. It will be discussed by the Monetary Policy Committee, of that you can be sure.
As I indicated higher up, there's been much happening since the last OCR review in November. But the above are what I see as the standouts.
So, for me there's been both a number of significant 'overs' that feed into an 'inflation-is-strong, higher-rates-for-longer' narrative (the non-tradable inflation level, the super resilient labour market, that - for me - very surprising household survey result) and a number of 'unders' that at the very least point in a 'this-is-working, wait-and-see' direction for monetary policy.
The RBNZ has recently been at pains to stress that the most important thing is 'core inflation' - of which it has a variety of measures.
For the RBNZ then, it is in the interesting position of deciding what things it wants to place most emphasis on - because it has data in front of it that would easily enough justify either an OCR hike, or just as easily, a 'hold'.
At time of writing wholesale interest rates were pricing in about a 1-in-4 chance of an OCR hike this Wednesday. Against that the odds of future CUTs have been sliding. At one point the markets were pricing in FOUR cuts, THIS year. Now it's just ONE, probably in November.
Personally, I think the RBNZ would prefer not to make another OCR hike now . But what I think it wants is for the markets to keep chilled, to not get ahead of themselves agitating for rate cuts, and for mortgage rates and deposit rates to stay about as near to where they are right now - for as long as the RBNZ wants them to stay up.
And that would be for how long?
Well, till whenever the RBNZ starts to feel confident this inflation thing really is under control. The signs are good, but nobody can say definitively yet that it is under control.
In the meantime, I wouldn't really see any value in the RBNZ starting to hike again. It's an odd situation. I think if the RBNZ came out, guns blazing and used up its bullets now, the wholesale markets would be immediately saying: 'Is that all you got?' - and start to price in cuts again!
No. Surely it's far better for Governor Orr to appear on Wednesday clad again in his 'hawk' suit talking tough and with his gun in his holster - but tapping it on occasions, just for effect. 'I have the ammo - you know I have.'
I don't happen to think that anything this Governor says is ever a 'bluff'. If he says he's prepared to hike the OCR again (as he has) then he would be prepared to follow through on that.
But in this instance, surely the threat of action, rather than an actual hike may well do a better job of holding wholesale and retail interest rates up at a level that continues to do the job for the RBNZ.
It does seem likely, however, that the threat of the hike will stay on the table virtually right up to the time we do see the first cut - whenever that is. November is the current favourite date. The Orr-Hawk is not going anywhere for a while.
*PLEA TO THE RBNZ: Please bring back the 'eighth' OCR review in the year! (There's currently seven.) How about having the last OCR review for the year in December and the first OCR review for the next year in January (as WAS the case till 2016). It would cut out a lot of the kinds of febrile market speculation, which I think has been unhelpful to the cause, that we've seen in the past three months.
*This article was first published in our email for paying subscribers early on Friday morning. See here for more details and how to subscribe.
155 Comments
Talking about a financial strategy. Have New Zealand banks ever offered mortgages longer than 5 years? In 2015, while here in New Zealand as a permanent resident, I remortgaged my properties (3) and rented them out in The Netherlands. I used 10 year and 15 year fixed interest periods (2.875% and 3.2%) and was allowed to increase rent up to 4% every year. With the excess cash from the remortgaging and the rental income I was able to built up a property portfolio in New Zealand without mortgages since then. This was absolute not possible without using long term fixed low interest rates in The Netherlands.
No one really seems to understand the dilemna the RBNZ, and by default NZ, have.
There is a 50% chance of a 25bp hike by June priced into the market. If the RBNZ even flinch on their hawkish stance, rates fall and the NZ$ gets hit hard. Our current account position is bad, the only thing holding up the Kiwi is the RBNZ's stance and interest rate differential. They really cannot afford to cut this year, not sure about a hike, but no cuts.
100% correct. We can thank the moronic, un-necessarily ultra-loose monetary policy of the last few years, under Orr's direction, for the situation we are in. There was never any need for the LSAP program, nor for the OCR to go below 1.5-2.0% p.a,.
Under a more competent monetary policy, there would have never raised the need for an OCR peak higher than 3-4% max.
And now we have an OCR peak of 5,5%, with the small risk of it even getting higher than that (which I do not think will happen, considering the risks associated with such move).
We have a RBNZ that has been panicky both in cutting and in raising. In behaving like this, they are doing exactly the opposite of what they are paid to do, exacerbating the swings in the economy rather than moderating them.
Their incompetence is eye-watering.
I think at this point it's irrelevant whether the RBNZ shifts the slider up or down a notch. The bus has left the station and the driver is still in the staffroom.
With 12-18 months lag over any OCR change being felt in the economy, they might as well let it go down in flames, then come save us all with a wave of cheap money.
After a massive upswing in retail spending mid-late COVID, retail was always going to hit a wall - everyone was stocked up on treadmills, new TVs and other home comforts. Even more so once COVID became endemic and people shifted spending away from physical goods and into hospo and leisure.
The last time NZ hit the self destruct button on the economy was the 1980s, when gdp per capita tanked relative to the rest of the developed world. It *never* recovered - the gap remains. We are witnessing another permanent scarring event right now. It is complete madness.
People did this because they had to not because they wanted to. When interest rates were 20-22% credit card interest was used as bridging. One suspect's that the card was held by a different bank., much like today specuvestor spreads loans over multiple banks to avoid banks seeing how much risk is really on the table.
Yes the banks property and property aligned vested interests are hiding their dirty laundry:
TENS OF THOUSANDS, of stressed and now long delinquent borrowers on their books.
It's all to keep the crowd calm and not spòok the horses. They are all working in cahoots and overtime, to reinvigorate this fading Housing Ponzi, they pray for the 10% gains promised by the High Ponzi priest TA and AC.
Will they enginèer a rebooting of this ponzi corpse?
With interest rates above 4 to 5% it is impossible, as the income v debt topups are totally crippling.
Soon the banks will be forced to out, let sunlight sterilise, their badly delinquent loan books, - people will stand agast as to how this could happen??
Do not rule out a banking stability crises, on our shores!
Simple, when income goes no way to support debt........it must reset.
New buyers of property assets at 40 to 50% discounts, will about do these required resets
The RBNZs already tough and about to get tougher medicine is doing the job.
The aggregate LVR of residential property across NZ is 21 percent. So the effect of higher interrst rates on mortgage holders must be pretty limited.
Higher borrowing costs have more effect on businesses, landlords and councils but they can pass the increased costs on to consumers through pricing, rents and rates
Those with savings can generate higher returns and might actually spend more
All in all its probably more about the uncertainty of inflation and cost of living than restrictive monetary policy. So I probably side with Jfoe on this
Tell that to any retailer and they will laugh at such a comment. New Zealanders have shut their wallets except for necessities. It is bloody hard out there. The cost of food, petrol , rates and insurance premiums these days. While you are there talk to car dealers and cafe owners. They are doing it hard.
Depends on where you are in the country down to the suburb. Older retired debt free people are now creaming it on the super plus the interest on their TD's. Not really seeing a massive drop of in restaurant attendance as yet where I am but things could change very quickly, usually on sentiment rather than finance.
https://www.rbnz.govt.nz/statistics/series/lending-and-monetary/new-res…
The problem isn't LVR here, it's more DTI with regards to current market rates. DTI of 10 at 7% means 70% of your gross income is paying interest alone. Quite simple to work out, DTI x rate = % of gross income on interest. DTI of 6, rate at 7%, 42% of income. Still grossly high.
How did the country get into it's current situation?
One single decision back in 2016 led to continued GDP growth and now we're facing the consequences of that policy decision.
If the then Finance Minister had allowed the RBNZ to implement debt to income ratios on bank lending back in 2016, then house prices would not have reached such extreme levels in 2021. As a result of that single decision, the nation is now in the current situation where a sufficient number of households took on debt levels that are now causing financial and mental stress. Unfortunately some will resort to self harm. The pain that is being felt among highly indebted borrowers is the unintended consequence of that single decision back in 2016.
As they say, the bigger the party, the larger the hangover.
https://www.rbnz.govt.nz/statistics/series/lending-and-monetary/residen…
"The problem isn't LVR here, it's more DTI with regards to current market rates. DTI of 10 at 7% means 70% of your gross income is paying interest alone. Quite simple to work out, DTI x rate = % of gross income on interest. DTI of 6, rate at 7%, 42% of income. Still grossly high."
At a DTI of 5, then at:
1) interest rate 7.0%, this is 35% of gross income (on an interest only basis)
2) interest rate of 10.0%, this is 50% of gross income (on an interest only basis)
Wait.
Central banks are attempting to stabilize an economy and market that largely needed time for the wider situation to stabilize.
Finding an equilibrium from COVID era consequences was going to be a 5-10 year process. The economy has been shifting towards finding it's feet over the last 12-18 months, but it's now also got to contend with the market ramifications of higher lending.
Temporarily raise Taxation.
It too sucks disposable income from the system but unlike the OCR it doesn't enrich the already rich. Further, it retains money in the NZ economy that government can spend on things NZ Inc. really, really needs. Like what? ... I don't know. .... Like maybe ... Infrastructure.
Unless everyone packs up and moves to Australia. How do you run a health or education system with no doctors, nurses or teachers? When the half of households who pay all the tax leave, and the only ones left are the ones who suck in taxpayer funded welfare, where does the money come from? Company taxes? When all the multinational companies close down, and NZ companies shift their headquarters to Australia, where does the money come from?
You only need to look at the mass exodus of both people and businesses out of States like California, New York and Washington and into States like Florida and Texas to see the effect of higher taxes. People vote - if not with their ballot then with their feet.
Do you think raising OCR is there to suck disposable income from the system?
I think it's there to influence people to change their spending habits, like paying off debt, and building up a savings account. People will put more value in money, which fights inflation.
There shouldnt even be discussion here. IF RBNZ believe inflation may not drop then they should raise the ocr. No question. I actually think it needs to go up... inflation is getting baked in and expected and that's dangerous so a short sharp hike now is way safer than a lot of raises or higher raise later.
the deal is that everyone knows in advance how inflation is dealt with (ocr increases and decreases and thus interest on loans will rise and fall).
Everyone thus can choose the level of risk they are comfortable with and borrow accordingly. Those that overleverage are currently in trouble.. those that were more cautious are fine...
The only error was lowering the ocr during the pandemic.
The OCR dial changes investment in / value of assets and leads to changes in aggregate demand in the economy. it does this by changing the ROI on investments and by taking money off mortgagors and businesses and giving money to bank shareholders and savers. Whether any of this actually tackles / promotes 'inflation' is questionable. If changing the OCR does affect the overall price level, it is a monumentally crude tool.
In NZ, our bouts of inflation always come from an external price shock - a systemically important imported good (e.g. diesel) getting suddenly more expensive. By 'systemically important' I mean 'contagious' - the increase in price spreads quickly into other prices. Labour / wages are systemically important prices (so is the cost of credit, btw).
So, the first thing I would do to tackle inflation would be to identify those systemically important prices are look at how sudden price shocks can be absorbed. For example, Govt could easily use its balance sheet to smooth out sudden price rises and falls in imported fuel - dialing excise duties down (and up) to smooth out the price shocks and slumps. Similarly, collective bargaining and agreements on wages can be stabilising - look at Denmark where they squished inflation like a bug.
Some inflation is a demand outstripping supply problem. For example, rental prices in Auckland (where migrants typically arrive) have been going bananas for months. When consumers switched from buying durables to consumables during COVID-19, the supermarkets made out like bandits. Now, think about this for a minute. If workers being paid more just leads to people just charging them more for stuff, is the solution to make those workers poorer?!? Switzerland have had this 'problem' for years because they are a very wealthy country with limited competition. What did they do - and why have they not seen much inflation? They police their prices like demons - making sure that businesses / landlords don't take the piss.
The other way of reducing demand in the economy is increasing savings rates (war bonds a good example) and using targeted taxation.
The only people that look at 'inflation' in detail and decide 'we'll just use interest rates' are brainwashed economists. We need to stop listening to them.
Thanks for taking the time to respond. The potential solutions make sense.
I get frustrated when one hears of permanent solutions to reoccurring problems that have been tried and tested overseas, but get ignored here or elsewhere. You’ve given some monetary-based examples. Other examples include superior methods to successfully rehabilitate prisoners, or effective ways to fight against drug issues in society.
All too often societies ignore these lessons and carry on urinating into the wind while saying to themselves, “Tomorrow I’ll be intelligent.”
Many people where against OCR hilkes as they felt it was out of control Labour spending that was causing inflation, well now we have high rates relative to many peoples borrowing (not as high as pre GFC though) and national are about to remove that liberal spending support....
With people spending little, Gov spending little and most businesses already hunkered down, this landing may be something to remember, this does not feel like a soft landing....
Was talking to a good friend yesterday who put the unchanged probability at about 85%, due to how tough it is in business out there at the moment. I tend to agree, they will be watching whats happening offshore to see if it is likely to impact exporters over the next 24 months.
Perhaps the biggest thing, will the FED hike before US elections or have they done enough?
Was talking to a good friend yesterday who put the unchanged probability at about 85%, due to how tough it is in business out there at the moment. I tend to agree
This would seem a consideration. Maybe this time it's different, but as much as the central banks' rhetoric singles out inflation as priority #1, clearly in the past internally they're factoring in other aspects of the economy.
For sure they have to fight inflation, but financial stability is also a consideration, nationals withdrawl of 6.5% of spending in many departments is going to weigh heavy on the economy, if any gets given back as tax cuts I doubt it will be spent on smashed avo on toast
cutbacks must be worth a few hikes themselves, we are about to feel poor from cost of living, poor from lack of council pend on core infrastructure (looking at you wellington) poor as services get cut.
I cannot see how Police can save 6.5% when they clearly need considerable money spent on a new 111 system capable of sending txt etc and linked up secure radio between police ambos and fire.. And somehow add 500 police AND replace those retiring or going to Aussie....
Next up health - lets pass on that one clearly there is not 6.5% there, they need three times that to recruit Drs...
Its obvious to me that tax cuts cannot be afforded here, and as a national voter I would forgive them for saying so.
I'm not really an advocate of tax cuts either, as you've said we need to spend more in some areas. There's been a significant amount of wasted spending, but I don't think you can divert that towards the front line and have it be enough.
Although with the tax cuts, at the lower end pretty much all of it will be spent in the economy almost immediately. Likely most of the middle also.
The real problem is that we have an unbalanced economy, housing/rent is sucking everything out of the consumer, hence there's not enough to go around, no discretionary cash for the likes of hospitality, retail etc. Government should have never allowed property to run away like it has (at the time they thought it was great, the BS trickle down theory etc), only when/if the can get property to drop to rebalance the economy things will improve for all sectors.
Buy a million dollar house with 250k down and your monthly payment is $5,188 for THE NEXT 30 YEARS.
And a mill in Auckland does not get you that much nowdays....I think the market is in big trouble there is no support at the bottom
If that $5188 represents 50% of your income it means you are making 178k as a couple...
Thats a lot of interest to pay a bank over the mortgage life.....
Yes, it'll be interesting. They can't drop rates, as it allows property to run away.
I think it'll be on hold (or rise maybe .25 + .25) but they'll be very reluctant to drop. If they rise from here, it does give them room to drop by the same margin in the future, but I very much doubt the OCR will ever go below what it is now (unless we have a Nuclear war, which is very, very much a probability, now that we are officially in WW3).
Not all consumers though. The third of households who dont have a mortgage are better off today than in 2021 with low interest rates, as they are now getting a decent return on their savings, and thus now have even more money to spend. The other third of households who do have a mortgage may also be unaffected, like my family member who continued to pay the same amount each month off the mortgage when interest rates fell, so they now have a much smaller mortgage to pay off despite higher interest rates. Or my friend who fixed their mortgage for 5 years in 2021. The remaining third of households rent, and the simple answer to rising rents is not lower interest rates but lower immigration rates.
Don't act like this isn't entirely your fault. Don't pretend no on was telling you not to take on too much debt. You didn't consider paying more standard interest rates and how that would affect you. You felt entitled to being helped if anything ever happened. You brought a house because of your relatively good position at the time. You did it because everyone else was doing it instead of using your head. The only reason why interest rates need to go up is to protect us from people like you who will sign any contract given to them instead of refusing to buy ovrepriced houses and making them go down. Always full of excuses, they will always go up, some investor will buy if not me, I just want a roof over my head... blah blah not listeneng.
Yeah. It's real. I posted the following when David wrote about a few days back:
Lol. Statistical soup.
For example, which measure of inflation. The CPI used by the RBNZ that excludes numerous costs associated with RBNZ created high interest rates? Or the far more realistic Household Survey done by Stats NZ that includes all relevant costs?
Were the survey sample members even aware of the difference? Most likely they hear all about the RBNZ's CPI ad nauseum from MSM but experience the Household Survey done by Stats NZ every day and on every mortgage repayment.
And how many of the people sampled are actually price-setters? I suspect the majority will be price-takers. And how many actually had mortgages? And of those mortgages, how many were OO and how many were 'investors'?
re ... "The significant thing about this household survey is that it has a good recent track record of picking the actual inflation outcome one-year out, according to analysis the RBNZ did on surveys last year."
The report makes interesting reading. It concludes: The household inflation expectations survey of the RBNZ and 1year consensus forecasts are particularly noteworthy in their forecasting accuracy, offering significant forecasting value to the simple models.
But go back to the graph "b. Headline inflation and 1-year survey inflation expectations" on page 6. Sorry, I don't see the Household predictions (HH median and mean) as showing any predictive capability at all. Can you?
Central banks increase rates until something breaks, then they cut... NZ has not broken yet (Budget 2024 may break a few things)
It feels stuffed and many young people are off to the west island for a better life. It looks and feels to me that the current bag holders are still in denile as to the RBNZ end game.
How prescient was I??
I talked of the looming Mortgagee iceberg, that the banks are colluding with the Onewoof coven to paper over and cover up......and a moment later this article drops. It is leaking out now......
Expect hundreds of such weeping tears articles, such as this in 2024/2025 as these people are forced to exit their "Investments" that they entered over the 4 to 8 years.
They were stupid investments at the start, as the income was pitiful and only gambling on the capital gain gravy train, to continue arollin.
The new world of Higher Forever Interest rates in here ......unless a nuclear war winter gives us a bigger reset....
WOW that newshub article is telling it like it is, there is a real disconnect if you believe what you read in NZ herald and TVNZ One news its all going along dandy, then the seven sharp rose tinted good as gold bollocks....
ANYONE with an ear to the ground knows that there are a lot of people who need to sell or they will be forced to sell ... and its not selling.
There are also a lot of people moving to Australia who are renting out their houses in NZ. Mainly because house prices have fallen in their area and they "want that money back" so they will "wait a year or two before selling". So there is a lot of stock waiting in the wings. One guy on the Moving to Australia group said his house had gone up 70% over Covid, but had now fallen and was only worth 10% more than when he bought it in 2017, and if he sold it now it wouldnt cover all the interest he had paid over the last 6 years. So he's renting it out, despite the fact that doing so is going to cost him $600 a week in top up payments. People like that are going to break eventually.
Yes, its been this way for over a decade though. How long do people expect others to keep their lives on hold waiting for a crash? If the answer is "forever" and you come from an era where you didn't need to do such a thing (i.e. where having kids didn't cripple you financially), then its a bit rich.
Hmmm ... Lots of talk about 'sticky inflation'. But is there any evidence of this in NZ in recent times?
Look at this graph. Stretch the graph sliders out so you can see the graph all the way back to 1995.
https://www.interest.co.nz/charts/prices/consumer-prices-index2
Now look at each inflation spike. If NZ has a 'sticky inflation' problem then you'd expect to see a fast spike up followed by a slower spike down.
Are there any? No. They're all pretty much inverted 'V's. Same rate up, same rate down and back into range.
If you believe "this time is different" then I'd love to hear why you think that.
Hi Blackbeard,
Yes we are either in or on the brink of a World War. Russian economy in now gearing towards a Total War, piece by strategic piece.
The West/us are involved by proxy, by equipping Ukraine in its defense. This is effective, as its enabling Ukr in fighting the "mighty" Russians to an effective standstill.
However, If the Russians do deploy their newly developed space Nucs to obliterate the USA GPS satellite systems above Europe/Russia - (it's how the Ukr are precision killing thousands of Rus Arty, Tank pieces and stupidly arranged Rus troop concentrations) - the Rus may deem them to be a legit military space target, it would then be WW3......
This would have us all in a state of Shock and Orr!
THIS WOULD cause the RBNZ to cut bigtime........as we adjust to much cooler climate and reduced yields and demand from the Northern Hemisphere. Much bigger problems, you could say, than selling our houses to each other, as is our NZ work and pastime.
While I make no decision on what one person proposes or says......
My mate: Oliver Anthony, believes we are on the brink of WW3. A smart (not joking) blue collar guy from farming stock Virgina US, knows a thing or two on the current world events.
Words on the colluding media, bankers and politicians, in Washington DC (North of Richmond)
Oliver Anthony - Rich Men North of Richmond Live @ Tivoli Utrecht (Netherlands) February 5th 2024 (youtube.com)
State of the world. I wanna go home. Brink of War:
Oliver Anthony - Rich Men North of Richmond Live @ Tivoli Utrecht (Netherlands) February 5th 2024 (youtube.com)
Still standing by my prediction that Trump will get back in come November and at that point all financial support for Ukraine will end. Throwing billions at a foreign war effort with no returns is madness when your own economy is on the edge of collapse. The Democrats should have been smart and replaced Biden half way through his second term with someone that can be seen to get the job done better than Trump to keep him out of the Whitehouse.
Yes Trump is a win in Nov US elections.
The US support dwindles and Europe really gears up to support Ukr. The Germans dust off their Military Industrials (they are upping production and mil spending bigtime now) and ramps ammo/equipment production to levels not seen in 80 years.
Eccentric and bombastic for sure......Third world despots and other belligerents respected him.
His 4x years yielded world peace in 2016 -2020: A good thing!
1. No new major wars. (returned troops to the US)
2. Low inflation.
3. Secure energy supplies.
4. Tough on the wholesale Chinese IP/Industrial thieving.......
Number 4 screwed him over, as the US got the engineered Wuhan Flu, foisted upon them. Well played CCP.
----------------------------------------
Now, we got a lot to fix!
1936 Germany remilitarizes Rhineland
March 1938 Germany annexes Austria
Also 1938 Germany subsumes Sudetenland (part of Czechoslovakia).
27 Sept 1938 Neville Chamberlain:
- “How horrible, fantastic, incredible it is that we should be digging trenches and trying on gas-masks here because of a quarrel in a far away country between people of whom we know nothing… However much we may sympathize with a small nation confronted by a big and powerful neighbor, we cannot in all circumstances undertake to involve the whole British Empire in war simply on her account.
Early Oct 1938 Chamberlain again:
- "My good friends, for the second time in our history, a British Prime Minister has returned from Germany bringing peace with honour. I believe it is peace for our time."
Mar 1939 Germany takes the rest of Czechoslovakia
1 Sep 1939 Germany invades Poland.
3 Sept 1939 Chamberlain again:
- ""You can imagine what a bitter blow it is to me that all my long struggle to win peace has failed. Yet I cannot believe that there is anything more or anything different that I could have done and that would have been more successful. Up to the very last it would have been quite possible to have arranged a peaceful and honourable settlement between Germany and Poland. But Hitler would not have it. He had evidently made up his mind to attack Poland whatever happened....His action shows convincingly that there is no chance of expecting that this man will ever give up his practice of using force to gain his will. He can only be stopped by force."
Its easy, Russia keep the territory it already controls and Zelensky falls out of a window and is replaced by a pro Russian leader who puts the NO in NATO. An estimated 500,000 troops killed or injured in a war that was a total waste of time and money and is just a giant pissing competition.
The only thing happening the moment is Russian planes falling out of the skys.
Trump will loose..he is fast entering derangement system much like his cult followers and has no policies of any kind (much like National)
Putin will be assassinated sometime this year
Time will tell who is right
I will give you until Christmas this year, I will wager you are wrong on all accounts. If Trump gets in the Ukrainian war will be over by Christmas, possibly a bad winter could delay it a few months. The USA are already trying to block the billions of dollars being wasted. The war is a lost cause and the world is hitting a point in history where it can least afford it, too many other problems to sort.
Putin has no interest in going after the rest of Europe, all he has to do is show the strong man meme and he stays in power. Their economy grew 3% according to the news on Aljazeera, they are making more money on energy at the top that they can ever spend. I'm pretty shocked how so many people think Putin is stupid, do you have any idea what it would take to get to the top in a country like Russia and stay alive ?
Putin invaded Ukraine, starting in 2014; not the reverse.
Nato was not formed to attack Russia, it is largely there to stop Russia invading it's Western neighbours, and has never been a threat to Russia, has never invaded it.
Should be fairly clear to anyone of the meanest intelligence.
The Polish have a good knowledgeable experience of continual Russian aggression, invasions and conquest:
(21) Carl Bildt on X: "This intervention by @radeksikorski 🇵🇱 in the 🇺🇳 Security Council today will be a classic. Not much left of 🇷🇺 after that. https://t.co/nJJqMg8PwV" / X (twitter.com)
Putin announces he would much rather see biden as President and Trump agrees. Lol
With the interest rate increase, she now pays $1557.14 a fortnight - meaning her repayments have gone up by almost $475.
"On our last refix, I called the bank in tears when it went up to 6.89 per cent," Howden told Newshub.
She says she thought being a home-owner would benefit her family but it has done the opposite and they have a low quality of life with very little left over in the budget after the bills are paid.
"Both my partner and I work full-time but we can't save anymore. We have this asset sitting there but our quality of life is bad."
Meanwhile in London
The current average rate for a two-year fixed rate mortgage is 5.08%, up from 5.03% last week. The lowest available five-year fixed rate is 3.99%, and the lowest available two-year fixed rate is 4.38%
Mortgage rates to stay about as near to where they are right now - for as long as the RBNZ wants them to stay up. And that would be for how long? Well, till whenever the RBNZ starts to feel confident this inflation thing really is under control
Inflation will not be "really under control". It's highly unlikely that inflation will return to 2%, no matter what the RB does with the OCR. What will happen though, is that unemployment will surge and GDP will tank. So, as previously stated, at some point, the RBNZ will have to learn to live with a 2 - 4% inflation and drop the OCR to stop killing the NZ economy. When that will be is difficult to say
Stagflation made worse by war, de-globalisation, property debacle in china, climate change and cost of impacts.
I think if inflation goes below 2% its on its way to outright deflation and that is the end of the fourth tuning....
So the RBNZ may well live with the devil it knows rather then fight deflation, for which it has no silver bullets.
The global answer will be to raise the inflation target band and we all learn to live with inflation which conveniently inflates away all our (and the Govts) debt. Instead of 1-3% inflation target, it will become 2-4% inflation, and so long as inflation has a 3 in front of it, then everything's fine. This is one reason why the OCR and mortgage interest rates will not be returning to 2019 levels. Of course, unlike everywhere else, NZ hasnt even gotten in to the 3% band. Higher Forever.
In the transport industry I work in, we are seeing lots of R’s.
Redundancies increasing, receivership for several large, nationwide companies and almost everyone is saying recession.
I don’t see a need for another OCR increase, I think the pressure and pain will increase just fine on it’s own in the next couple of months as bad news spreads and confidence falls.
NZ Post is trying to pass its employees to contractors... most of the contractors have submitted feedback that this will not reduce costs.
Its not likely that rural delivery contractors will step in to employ the electric vehicle local delivery. NZ post already does parcels and thats where the money is, also Coural does not operate in towns as the couriers do their own delivery. Not sure how NZ Post is going to solve this one.
Parcel volumes are up but mail is slowly dying, can see it almost non existent in 5 years.
From the AFR
The central bank will hold its first policy meeting of the year on Wednesday and traders estimate a one-in-three chance it will lift the cash rate by a quarter of a percentage point to a 15-year high of 5.75 per cent. They ascribe a 61 per cent chance of that happening by May, and no monetary easing is factored in until October, when it is priced at just a 9 per cent probability.
Greece is the time, is the place, is the motion
Now, Greece is the way we are feeling ...lol (Barry Gibb)
Tailored suits, chauffeured cars
Fine hotels and big cigars
Up for grabs, up for a price ...lol (AC DC)
Freeze-frame (freeze-frame)
Freeze-frame (freeze-frame)
Freeze-frame, now freeze ....lol (The J.Geils band )
3 possible outcomes... Im thinking Greece is the word.... 0.50 hike...to punch inflation hard and encourage those with excess liquidity to start hunting value .... sounds hard but it will pay off and shorten the pain for many , being kind/soft wont cut it... knock it down while you can...
In my view this is all about tradable inflation (predominantly commodities) which have done the heavy lifting on inflation. As long as that dynamic keeps going RBNZ will leave rates as-is for the time being. They are nowhere near the bottom of theor target band so there is noreason to adjust policy settings.
If commodities start rising again however RBNZ will have to take a bat to non-tradable inflation. They need to show that in any eventuality they can keep inflation on the landing path.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.