The Reserve Bank (RBNZ) has increased the Official Cash Rate (OCR) to 3.0% from 2.5% - making this an unprecedented four 50 basis point hikes in a row.
The OCR is now at its highest level in seven years. There's more to come too, with the RBNZ indicating through its projections contained in the latest Monetary Policy Statement (MPS) that there may be another 50 point rise, perhaps in October and a follow up 25 point rise in November, giving an OCR of 3.75% by Christmas.
And the central bank is now forecasting a slightly higher peak in the OCR - suggesting it will get to just over 4% by the middle of next year and then hold at that level for 12 months. Previously the RBNZ had forecast a peak slightly below 4%.
The RBNZ has been hiking the OCR aggressively since beginning this upward 'cycle' in October last year - at which point the OCR had been on an emergency setting of 0.25% since March 2020.
The new slightly more aggressive forecast from the RBNZ comes at a time in which the financial markets have been anticipating seeing interest rates needing to fall next year. As a result wholesale interest rates have eased back and so have some mortgage rates.
RBNZ Governor Adrian Orr said the RBNZ Monetary Policy Committee (MPC) members "agreed that monetary conditions needed to continue to tighten until they are confident there is sufficient restraint on spending to bring inflation back within its 1%-3% per annum target range".
In the projections at the back of the latest MPS (page 45) the RBNZ is forecasting now that inflation will not get back under the 3% top of its target range till June 2024. This is six months later than the central bank forecast in its May MPS.
The RBNZ is, however, forecasting that the 7.3% annual rate of inflation seen for the June quarter 2022 will prove to be the peak and it is forecasting that inflation will drop to 6.4% by the end of the September quarter we are currently in.
The record of the MPC meeting indicated that committee members had discussed whether to increase the OCR by more than 50 basis points.
"The Committee discussed whether more rapid increases could improve the credibility of the inflation target and reduce the risk of a significant increase in inflation expectations. However, the Committee agreed that maintaining the recent pace of tightening remains the best means by which to meet their Remit," the RBNZ said.
In the MPS the RBNZ said while there is considerable uncertainty about the outlook for house prices, "the central projection assumes that prices will continue to decline until the September 2023 quarter".
"This would result in a total decline of 15% from the December 2021 quarter peak, slightly more than assumed in the May Statement. Lower house prices and higher mortgage rates are assumed to result in weaker household spending, as households feel less wealthy and more of their incomes go towards servicing their debts," the RBNZ said.
It is, however, now forecasting a stronger bounce-back in house prices than it did in May. It sees quarterly house price growth starting by the December quarter of next year (2023), which is six months earlier than it forecast in May. It now sees annual house price inflation bouncing back to 7.6% by September 2025, which is the end of the forecasting period.
It said while residential construction activity "is starting from a strong position", the outlook has cooled.
"The weaker outlook reflects tighter credit conditions, higher interest rates, labour and materials shortages, and lower house prices, which all make residential property development less attractive. Residential investment is assumed to ease fairly gradually in the near term as builders work through the large pipeline of consented projects, before declining as a share of the economy over the medium term."
This is the statement from the Reserve Bank:
The Monetary Policy Committee today increased the Official Cash Rate (OCR) to 3 percent from 2.5 percent. The Committee agreed it remains appropriate to continue to tighten monetary conditions at pace to maintain price stability and contribute to maximum sustainable employment. Core consumer price inflation remains too high and labour resources remain scarce.
Global consumer price inflation has continued to rise, albeit with some recent reprieve from lower global oil prices. The war in Ukraine continues to underpin high commodity prices, with global production costs and constraints further exacerbated by supply-chain bottlenecks due to the ongoing COVID-19 health challenge. The outlook for global growth continues to weaken, reflecting the ongoing tightening in global monetary conditions.
In New Zealand, domestic spending has remained resilient to global and local headwinds to date. Spending levels are supported by a robust employment level, continued fiscal support, an elevated terms of trade, and sound household balance sheets in aggregate.
However, production is being constrained by acute labour shortages, heightened by seasonal and COVID-19 related illnesses. In these circumstances, spending and investment continues to outstrip supply capacity, and wage pressures are heightened. A range of indicators highlight broad-based domestic pricing pressures.
Committee members agreed that monetary conditions needed to continue to tighten until they are confident there is sufficient restraint on spending to bring inflation back within its 1-3 percent per annum target range. The Committee remains resolute in achieving the Monetary Policy Remit.
Summary of Monetary Policy Committee meeting:
The Monetary Policy Committee discussed developments affecting the outlook for inflation and employment in New Zealand. Consumer price inflation is currently too high and labour remains scarce. The Committee agreed to continue increasing the Official Cash Rate (OCR) at pace to achieve price stability and to support maximum sustainable employment. The Committee is resolute in its commitment to ensure consumer price inflation returns to within the 1 to 3 percent target range.
The Committee judged that the global economic outlook has weakened since May, reflecting tightening financial conditions, ongoing geopolitical tensions, and continued disruption to global supply of goods and services. The war in Ukraine has put upward pressure on global commodity prices, especially oil and food, and disrupted global trade. Lockdowns in some Chinese cities to combat the spread of COVID-19 has contributed to supply-chain bottlenecks and shipping times and costs remain elevated.
Inflation is at the highest level in many decades in most advanced economies, due to disrupted and curtailed global supply coupled with a strong recovery of demand following the disruptions and uncertainties caused by earlier phases of the pandemic. Most central banks are raising interest rates, in many cases at a much faster pace than has been seen in recent history. Higher interest rates abroad have placed downward pressure on New Zealand’s exchange rates, making our imports more expensive while supporting exporter returns.
Developments in the New Zealand economy were discussed by the Committee. Demand has remained resilient to global and domestic headwinds to date. However, output is being constrained by the disrupted global supply of goods and services and acute labour shortages, made worse by high levels of sickness from COVID-19 and other illnesses.
Members discussed the outlook for domestic demand. Residential construction activity has been strong, but the Committee discussed downside risks to future construction activity, with some construction firms reporting a fall in forward orders. Business surveys and direct reports from businesses suggest a more general slowing in business activity in the coming months. However, inbound international tourism is recovering from a low base and that is expected to provide some offset to weaker domestic spending.
Household balance sheets on the whole are strong, but higher interest rates and rising costs of living are putting pressure on household finances, and are expected to reduce household spending and house prices. House prices have steadily dropped from high levels since November last year, and are expected to keep falling over the coming year towards more sustainable levels.
Production capacity pressures remain. In particular, labour shortages are a major constraint on business activity. Wage growth has continued to pick up in line with tightness in the labour market, and there is some evidence from discussions with businesses that firms are increasing wages more frequently. However, hourly wage rates are rising more slowly than inflation. The Committee was encouraged by recent declines in survey measures of inflation expectations, but remains alert to the risk of a more pronounced change in wage and price setting behaviour.
The Committee discussed the outlook for fiscal policy, and noted upside risks to overall government spending due to the rising cost of delivering government services.
The Committee expects some easing of the rate of inflation in the near term due to falling petrol prices and stabilisation in international shipping costs. However, inflation pressures have broadened and measures of core inflation have increased. Nevertheless, inflation is expected to return to the Committee’s 1-3 percent target range by the middle of 2024, but this will require a better balance between supply and demand.
The Committee discussed changes in the level of commercial bank cash balances held at the central bank. Noting current high levels, the Committee discussed the factors influencing those balances, including the Large Scale Asset Purchases (LSAP) and Funding for Lending programmes (FLP). Both of these programmes provided monetary stimulus through lowering longer-term interest rates.
The Committee noted that the volume of commercial bank lending is determined by several factors including customer demand for loans, banks’ perception and appetite for risk, and prudential requirements on banks’ capital, cash and other liquid assets and funding. The LSAP and FLP programmes did support bank funding and liquidity positions, but there is no evidence that this is currently having a direct impact on lending activity over and above their impact on interest rates. Credit growth is modest in the context of rising interest rates. Settlement cash balances will gradually reduce as the Reserve Bank sells back government bonds to the government as the LSAP programme is unwound.
The drawdown window of the FLP will expire in early December, and some further usage of the programme is expected in the coming months. In total, the programme will fund no more than 6 percent of bank lending. The programme has lowered funding costs for banks, which has contributed to lower lending rates for borrowers and provided additional stimulus to the economy while the OCR was low. However, the Committee sets policy to achieve the overall desired level of monetary conditions, and has offset the impact of the FLP with a higher OCR as monetary policy stimulus has been removed. The Bank’s experience using monetary policy instruments such as LSAP and FLP will be reviewed as part of the five-yearly Review and Assessment of the Formulation and Implementation of Monetary Policy.
The Committee discussed the possibility that neutral interest rates may be higher. For example, market-based estimates of neutral nominal interest rates have increased over the past year. Staff will be undertaking further work to review their estimates.
The Committee agreed that further increases in the OCR were required in order to meet their Remit objectives, and discussed the appropriate pace at which to raise rates. The Committee discussed whether more rapid increases could improve the credibility of the inflation target and reduce the risk of a significant increase in inflation expectations. However, the Committee agreed that maintaining the recent pace of tightening remains the best means by which to meet their Remit.
The Committee noted that a number of central banks had increased interest rates by more than 50 basis points recently, but that most of these countries had started increasing interest rates later than New Zealand did and were often starting at a lower level of interest rates.
The Committee agreed that domestic inflationary pressures had increased since May and to further bring forward the timing of OCR increases. The Committee agreed to continue increasing the OCR until it is confident that monetary conditions are sufficient to maintain expectations of low inflation in the longer term and bring consumer price inflation to within the target range. The Committee viewed this strategy as consistent with achieving their primary inflation and employment objectives without causing unnecessary instability in output, interest rates and the exchange rate.
On Wednesday 17 August, the Committee reached a consensus to increase the OCR to 3 percent from 2.5 percent.
247 Comments
I found this article from www.oneroof.co.nz that you might be interested in:https://www.oneroof.co.nz/news/42037
What a clown. He is now trying to claim those granted residency "looking to buy" could push up prices.
Yet back in early 2022 he said this:
One thing about to happen is what I call “clutching at straws”. Many people won’t accept that the boom is over and will give excessive weight to some factors which will help insulate the market against the dominant negatives (see below). One straw is the belief that 165,000 migrants eligible for residency visas will immediately rush off and buy houses. Some will. But most in my observation are not in a financial position to do so and the overall boost to house prices from this effect will be small.
Clutching at straws indeed.
What Jesus did say (if the bible is true...):
Mathew 7:15 Watch out for false prophets. They come to you in sheep’s clothing, but inwardly they are ferocious wolves.
I know many property investor types who fit this fold....P8 reminds me of one while he was encouraging people to buy in 2021, while his children were simultaneously selling out of their housing portfolios (but he didn't tell you that until afterwards). Now that his kids are all cashed up and sold their houses to FHBs who might be in negative equity, he's gone quiet and disappeared from providing any financial advice.
Apparently Tony Alexander is under the impression that increased migration plus the conversion of the work visas to permanent visas will cause house prices to rise- that’s because he is totally ignoring the fact that
1. the visa conversion is not “permanent residency which is needed to buy property. These migrants will need to wait a further 2 years and then apply for permanent residency ( that means mid 2024)
2. Todays migration figures show again a net loss of migrants with almost equal number of migrants leaving than arriving and twice as many kiwis leaving than coming back permanently
so this “migration demand” feels like it’s some time away from coming to fruition
NZ's hourly median wage has moved up to $29.66 in the June 22 quarter, so migrants applying for residency next year will cost their employers over $32/hour, including holiday pay but not counting other staff expenses, to be eligible for permanent residence.
So there may not be the huge residence application volumes that we were used to pre-pandemic.
Even a change in government may not help, since it was Lord Key who put this median wage threshold on residence applications in place.
As long as you live in the country for most months in a given year - ‘ordinary resident’ and get the residence visa, you can buy a house.
https://www.linz.govt.nz/overseas-investment/discover/our-investment-pathways/buying-or-building-one-home-live
It maybe too early to call it bottom of the housing market, but my personal view is that, it was a mistake last year to think house price will keep going up, it is equally a mistake to think house prices will go lower and lower.
So I think Tony Alexander does have a point, and it's worth to pay attention.
It is possible if they open the floodgates to workers, NZs population will rocket up and they need somewhere to live, and I believe National would be all for that. It was Labour who was for reducing immigration numbers, despite it being about 80,000 a year prior to lockdown. We have used immigration to unsustainabily grow the economy, but at the cost of stretching our infrastrcuture and services.
Depends if the markets believe the RBNZ. The RBNZ have basically said, “we have seen the slight easing in inflation and slowing of the economy, but we still think the OCR needs to go higher for longer”.
If the markets believe it, rates will go higher. If they think the RBNZ is bluffing/jawboning, maybe not.
Sure you will, rates are tracking up nicely. On reflection I should have gone 6 months and not a year but who knew rate rises would be this fast ? Savings rates are going to have doubled in the space of a year. Totally huge change from the 1% from only 18 months ago. Rates will quadruple in 2 years.
Nurse, taxation takes money out of the economy, so counters inflation. If housing was taxed like other productive assets, house prices wouldn’t have inflated nearly as much, nurse. Nor do taxes fund the expenditure of a currency-issuing government, like NZ. They create the need for the currency and they free up fiscal space for the government to spend in. As for government expenditure and inflation, it depends what that expenditure is on. If you (or the government for that matter) pour fuel on the fire, it’s probably going to combust. If you pour it instead on a damp patch of ground, it’s probably not going to combust.
Legit, you state "taxation takes money out of the economy, so counters inflation". This statement does not seem to be correct.
Instead, taxation takes money away from the private sector and gives it to the public sector, where it gets spent on government favorites. So, taxation does not counter inflation, the money remains in the system.
Taxation shifts money from the private sector to the state, where it is usually employed in less productive ways. Taxation does not reduce inflation, in fact it may worsen inflation (for example fuel taxation).
Well taxation is the first step to reduce inflation. The second part of the equation is cutting government spending, so those surplus dollars don't find their way back into the system.
An increase to fuel taxation will only cause "transitional" inflation as the pricing adjusts. If those additional tax dollars are not spent, and instead used to pay down Government debt, then it won't be inflationary for long.
I like your idea of "cutting government spending", after having raised taxes. I trust it as much as I would trust a fox who tells me he will feed the chickens after I gathered them up and put them in the hen house.
Please dearest leftists on this forum, wake up and realise that big government is no good. The current government has delivered a live demonstration of this. Our country now finds itself:
- at the end of a massive property boom which had put property purchases out of sight for many;
- as property prices come down, the ones that did manage to buy are now facing high interest costs and perhaps negative equity;
- a largely failed attempt by the state to build more houses;
- a financial crisis at hand, which may perhaps trigger much more money-printing when it manifests itself, and this may ultimately lead to hyperinflation;
- the population having been pressured (with 'kindness') into 'vaccinations' which seem to resemble genetic modification;
- one of the highest sickness rates in the world alongside Australia, despite or because of the 'vaccinations';
- legislation in place that makes killing unborn children even easier than it was before;
- peaceful prayer in front of abortion clinics outlawed;
- constant ideologically driven approaches to policy, depending on the government's favorite ideology;
- in one word - a nightmare - when will it end?
Growing up behind the iron curtain, I was a socialist at heart. But I learned from experience. You know, there is a saying:
He, who was never a socialist, has no heart. He, who remains a socialist, has no brain.
God bless!
Bless. Thanks for the long list of straw men and departures from the actual point in question which is not whether the government is good or bad, but rather about your misconceived understanding of the monetary system. Taxation takes spending power out of the private sector and real economy, so it is not inflationary all other things being equal - noting the potential for transitional hiccups as investment changes (eg, if a comprehensive tax on capital gains was introduced). Tax does not fund the spending of a currency-issuing government. Such governments spend and then tax. They type numbers into a spreadsheet; they do not go down the mythical Aladdin’s cave to check the gold supply under 2 The Terrace.
Sparrow, what you are saying is just vitriol. The facts, instead:
We do need some migration, for example nurses. Tourism does not have to be mass low-value tourism but a bit of tourism could potentially help many businesses.
Nobody will or even can restart the speculation game on property. From here on, we are lucky if a massive deflationary collapse or hyperinflation (perhaps later) can be avoided. This would require skillfully timed mild OCR hikes, but I have given up hope. Prepare for total collapse! I hope I will stand corrected on this, but I am not holding my breath.
https://www.rnz.co.nz/news/national/461723/hospitals-consistently-under…
https://www.beehive.govt.nz/release/safe-nursing-report-shows-why-healt…
https://www.nzherald.co.nz/nz/burned-out-nurses-told-to-rely-on-each-ot…
https://www.1news.co.nz/2022/04/03/fed-up-nurses-say-they-are-understaf…
https://www.newshub.co.nz/home/new-zealand/2022/07/nurses-organisation-…
Maybe they are working 32 hours per week while studying full time?
That's just simply not true. There are a minority of nurses who are mothers of young children who work less hours (nursing is female dominated so this will be skewed compared to other sectors), however, with staffing shortages the majority work over 40hrs as they are required to pick up extra shifts. I don't work in a hospital but my average week is between 50 and 65 hours.
Many nurses have still depending children. Why would you not work part time and spend more quality time with your children instead of farming them out and both you and your partner working fulltime/ overtime just to make ends meet and stressing the whole family out?
I think it the fault is shared. The government should set the rules to make the society we want. However people also have their own actions to account for. You can be the most awful person in life, ruin many other peoples lives, and yet not break any law. People have to have a way to feel good about themselves/sleep at night, so they construct narratives about why they are correct in their actions - its the fault of the government for making me do this, its the tenants fault they don't work hard enough, I am helping the tenants out here.
Most of our actions every day affect others in positive and negative ways, in NZ and abroad. Land lording is just one such action that has moral implications. Doesn't mean everything is the governments fault. They are at the end of the day, a reflection of us.
Or to Labour’s track of records that
- increased immigration to historically high level (that’s actually the case, check the numbers)
- increased property prices by 50% since they got elected instead of building 100,000 houses
Think what they’ll do shall we give them another 5 years.
I agree National is not great. But the times under National were way better than what we are going through now.
Under Labour, we have seen nothing but leftist totalitarianism ('vaccine' mandates) and economic stupidity. I am not normally a very political person (more interested in economics and religion, not politics), but what I am seeing these days makes me positively sick. I am so over this government and the Reserve Bank staff, I wish they would simply be replaced.
The main problem is humanity's quest for efficiency, has led to extremely fragile supply, manufacturing, and labour market chains.
Governments and reserve banks are merely tools to try and manage or mitigate those issues. Whether theyve made things better or worse is hard to say.
I was never much into politics, not a fan of National. In fact, I never even voted in this county until Labour proposed more abortions, that's when I started to vote.
But these days, National sounds like music in my ears, it has become so bad. Please, somebody wake me up from this nightmare.
Those that are short on housing (a good position to be in these days) - remember the window of opportunity may not last. Unless a conspiracy is going on and they want to outright crush our economy, money printing may resume at some point, and perhaps in a huge way, to save a crashing economy. At that point, FOMO may come back very quickly, as the Dollar evaporates into hyperinflation. I just don't see a soft landing anymore, hopefully I will be wrong.
Protesting by nature needs to be disruptive.
From a utilitarian perspective I'd always felt volunteering at a food shelter would better represent someone's diety's good nature than protesting at an abortion clinic. I guess maybe if you can save one unwanted baby from being terminated that's better than helping dozens of live kids who are going without.
Maybe just protest absolutely anywhere else? You are free to do so.
That bill passed 108 votes in favor to 12 against. As a conscience issue it is not going to be changed back no matter who is in power. Well, not at least until the second coming.
Wikipedia:
"Totalitarianism is a form of government and a political system that prohibits all opposition parties, outlaws individual and group opposition to the state and its claims, and exercises an extremely high degree of control and regulation over public and private life."
Hello Markus, do you know about this?
About Us - Save the Storks | Empower women to choose life
https://savethestorks.com/about-us/
Providing advice and help along with ultrasound.
"the (FLP) programme has lowered funding costs for banks, which has contributed to lower lending rates for borrowers and provided additional stimulus to the economy while the OCR was low"
As a business only lender I dont agree - maybe if Id fired everyone and bought a house I wouldve benefited.
Unfortunately there is still a 19th century mindset in this country, a mindset that relies on housing and on parasitic housing speculation rather than the real economy. This is why we suffer from low productivity and a undersized capital market. It is quite embarrassing really. Well, things will start to change once the NZ housing Ponzi starts imploding next year.
Technically anything could have played a role in it, but it's really down to risk fundamentals.
Fact is a huge percentage of new businesses fail, often with negative assets, or recoverable for cents in the dollar.
It's what I don't get about the "just nerf housing and people will invest in business" view, as if there's a backlog of highly profitable, highly stable commercial opportunity that's currently unable to attract investor funding.
You’re right and I dislike that crowd immensely.
But at the same time there are so many profitable businesses right now that need to sell due to Boomers retiring. Many won’t sell and will need to be merged into competitors, suppliers or customers. I just bought 3, all were running since the 70s, and profitable. I still had to use residential property on the 60% of purchase that is debt funded to (1) get debt and (2) get reasonable interest pricing. In the US, someone would go to the SBA or similar and receive a subsidised loan. In NZ, no one wants to invest in business, even though the ROI is far greater than property (residential or commercial), and then for those who do the banks aren’t interested unless you have property to secure it.
Lastly, as an aside, I don’t think that crowd realised if the property market gets nuked what happens to business lending - existing will have to be restructured and new will become impossible until equity is rebuilt.
Congrats on the business purchases. That's an opportunity a lot of younger people seem fairly oblivious to. A lot of these businesses are profitable as you say, with room for upside as many older owners are running businesses like it's the 80s.
Potentially maybe there needs to be an increase in vendor financing here, then after a year or two with stable new ownership the new owners can migrate into more traditional borrowing.
I'm not sure what can be done re: business lending. The government can subsidise it, but I'd assume there would be a decent default rate and marginal return.
Nothing like owing a million bucks at 12% with a 5 year repayment period to really strangle a business. Never again.
I found an investor 8 years ago, his 100k invested has been paid back 5x in dividends and his shareholding is probably worth 7x his investment. On the way to finding him, I had 3 other prospective investors fall over. At that time the bank wouldn't give me a business credit card.
100%.
My business was the best return on money I've ever had (considering initial investment vs drawings over the years). Unfortunately had to be 100% self-funded as without a house had zero access to finance, so capital was constrained, but it kept us living comfortably for a few years.
Closed it down when Labour took away all my cash-flow with the second lockdown, found competitors to take my remaining contracts, and now I work for someone else.
Ah well, one day again.
What is a New Zealander? Do they live on a Marae and speak Māori? Or do they have a BBQ and talk about how much their house price has gone up? Because I know which group the RBNZ currently care about! If you honestly think that’s all fine because we are all New Zealanders then you have a very warped view, I am sure you would think otherwise if it were the other way around. Didn’t we sign some kind of treaty?
Yes and judging by the votes on the comments it seems NZ still has a very long way to go. Anyone who thinks Māori got a fair deal out of the treaty are kidding themselves, the idea that they should just suck it up and live a white man’s life as a “New Zealander” bemuses me. Even using a bit of their language offends people (as New Zealanders don’t speak that language).
Ahh "progressive people", so convinced of the sweetness of their own brain farts that they insist on forcing them on everyone else.
Democracy and universal sufferage are actually inventions of evil old whitey. I prefer the days of my ancestral heritage when we used to just kill the tribes we didn't get on with
Ahh "progressive people", so convinced of the sweetness of their own brain farts that they insist on forcing them on everyone else.
You'd have to be incredibly naive not to identify that the global status quo for the last few centuries was structured by similar folk.
I like it though, English, NZ and Australian citizenship, but 1/64th bro!
It’s half their country, shouldn’t they get half the say
What should we do with all the recent immigrants, though? Is it their country too? Immigrants can vote if they have citizenship, so many people can vote after only living here for 5 years.
If we base who the country belongs to on whether they emigrated here 900 years or 5 years ago, would you prefer we give weight to votes based on how long your ancestors lived here? Because to me, that sounds more logical - but yes, also more crazy.
Exactly, white people making all the rules because we outnumber Māori does seem a bit racist doesn’t it? Or do you follow the Don Brash we are all equal theory which is a very convenient thing to say when Māori don’t have enough population to have any say at all. To be honest I think Māori may actually do a better job of it than we have.
we are all equal except we all speak English, we all follow the white man’s ideals of living as long as possible continually saving to buy houses off each other, we have white man’s religions and holidays, we have white man’s planning rules and protection of the rich, we have very low interest rates to prop up the white mans housing pyramid, we have white man’s immigration policy to prop up our super and healthcare so we can live to 100. But that is totally fair and suggesting otherwise is racist?
What does it matter what someone’s blood line is, that is racist. What I am talking about is a culture, you can adopt that culture if you want and Māori can adopt our culture if they want. But at the moment their culture is being killed off by ours in almost every way. The RBNZs actions in the last 12 years are just another example of it. Why shouldn’t they consider Māori culture in their decisions? How is that woke or racist?
We should protect NZ heritage.
But surely in a democracy.. which NZ still is (i think).. its the majority vote that wins over.
We are a multi cultural country. Nz'ers, europeans, pacific islanders, Maori, Asians .. huge list. Noone is better than anyone else.. we all have to get along and make the best.
And that is what I am advocating for. What is wrong with the RBNZ considering Māori culture? What is wrong with using Māori words? As a white person I am happy for government departments to consider Māori culture, the people that aren’t make it really hard for us to just get along.
Well, then, RBNZ should consider Asian culture. I am assuming that as a % of population they are close to, or may have, overtaken Maori. Indians and Chinese also own a lot of property and are prolific investors, and therefore are disproportionately affected by monetary policy. Orr should be dropped as Governor until he speaks Mandarin. I hope you realise how stupid this sounds. I don’t think Brock is saying that Maori weren’t mistreated or that the Treaty of Waitangi was a great deal, but what you’re suggesting won’t improve outcomes for Maori or monetary policy. For example, Orr’s done the most work to involve Te Ao Maori in monetary policy and yet his reign has had terrible outcomes for Maori. Maybe he should have spent less time on learning Tikanga and more time on learning supply and demand economics, which may, funnily enough, have had better outcomes for Maori?
well... Napoleon was from Corsica.
Try to ask to French peps how French the people from Corsica are :D
anyways, jokes apart, yeah.
Races exist.
Ignoring the fact is to say the least hypocritical.
Embracing diversity is the best thing we can do.
It is a matter of perspective, you can look at the same thing with a microscope, from the right, from the left.
What is the correct one?
In a sense all of them are, in the other sense they are all partial.
Here is a different perspective
https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years#:~:text=Debt%3….
And I think the likes of Ngai Tahu et al have done very well out of monetary policy over the last few years, especially the zero-rated GST bit.
What a yard sale... Throw in the $8b and climbing loss on the LSAP as well for good measure.
He is actually tightening because wages are going up. I'm a director of an organisation that just gave a blanket 10% wage increase to all staff, some are really struggling to cover the basics. This money isn't going on holidays or restaurants, it's for heating, to cover rent increases, childrens clothing etc.
This is a truly disgraceful performance, the irony of someone on $800k+ per annum taking money away from those on low wages getting pay rises.
I put my hand up, got that one horribly wrong.
Fair comment. And few would have picked the Ukraine/Russia conflict at the time.
We all make comments/predictions that we are very confident of (at the time) and I have certainly got my fair share wrong, my view now however is that yes there are many signs and patterns that can lead very strongly to a probable outcome however we are in some of the most volatile and uncertain times of our generation and I think there are and will continue to be occasions where all bets are off.
Yeah you gt that wrong about the regions TK, its leaky rot boxes in Auckland and Wellington's bad suburbs that are getting smashed as we speak. Regions are trailing a long way behind in falls, so far there a chance they start going up before they have had a chance to fall very far at all.
For sure, do you believe in the possibility of a wage price spiral? I.e. the supply shock is the trigger, then it becomes and internal psychological issue (rather than an imported inflation issue)?
I know of quite a few in the same position as what you say above so this could be quite widespread across society.
I honestly don't care what the RBNZ does, they have zero credibility. These pay rises are literally so staff can heat their homes and eat. Inflation was not caused by excess demand like the 80's, it's caused by the RBNZ and Treasury. These very people are paid many 100's thousands of dollars, are immune to their incompetence and accountable to no one.
Now theres a sound bite.
I remember Switzerland looked into adding salary caps to top earners in an organisation to 12 times that of the lowest paid.
I think that is based on Japanese equivalent ERA.
I can immediately see problems with firing the lowest paid and contracting the work out but hey, new law, every business to hire a Janitor.
The RWC next year will be right on election time (final is 28 Oct), could be the deciding factor.
NZ elections have happened thrice before in RWC years, 1987, 1999 and 2011. In 1987 NZ won and Lange's Labour government was re-elected. In 1999 NZ lost, and Shipley's National government was ousted in favour of Helen Clark's Labour. In 2011 NZ won and Key's National government was re-elected.
Rates will continue climbing RBNZ just following FED maybe now people on here will accept the fact that rates will continue to climb, inflation is high well over the OCR. It will take some time for inflation to fall back under OCR, so many people over paid for property making it very hard for young couples to get onto ladder some have given up and just going overseas to have a better future. If they come back in a few years will hopefully find housing market 50% to 60% less, no much will stop this crash.
It is not looking good for most economies so much debt to unwind and you can bet it’s the average joe with a mortgage who will pay back most of the debt. Waiting at the end is the very wealthy and banks who will buy it all up at a fraction of what it cost before crash.
Orr should have raised by 75bps today, at the very least. Well, it appears that they did consider this option - but unfortunately they did not have the balls, foresight and competence to do it. 50pbs steps are simply too slow and they will not prevent structural embedding of inflation into the economy. Well, they still have time to do the right thing with the next review, and raise by 75 bps then, ideally 100bps. The OCR must be to 4% asap this year, and close to 5% next year, and stay at that level at least until the non-tradeable domestic component of this rampant inflation surge is tamed.
If they think that an OCR peak at 4% will be enough to do the job, and that it won't have to stay at that level for long, are just wishful thinking and planning for the best case scenario only.
I would disagree . By raising interest rates obviously you are stopping demand in housing and reducing prices . But when covid struck we lost our tourist industry and education and many other ways of getting income . Obviously with the borders being shut for 2 years no one left . But now you have a government that is anti immigration tourism wont recover , China our biggest export market struggling and tourism and education will take a long time to recover . The out come has to be a major recession . Why would the reserve bank want to create such a thing .
Inflation is running at 7%, as long as it lasts we have ever increasingly unaffordable food, houses and other basics for people.
The only way to stop it is to stop inflation..by faffing with small planned .5% rises vs larger overseas raises they are prolonging the problem and pain for NZers.
There will be pain coming no matter what. Its much better to act hard ànd fast and prevent inflation becoming the norm.
Right now we are the proverbial frogs in a pan.. and the heat is going up.
So called experts and media were indicating that it is not 0.5% rise that will effect the market/sentiment but the future guidance that Mr Orr gives :" And the central bank is now forecasting a slightly higher peak in the OCR - suggesting it will get to just over 4% by the middle of next year and then hold at that level for 12 months. Previously the RBNZ had forecast a peak slightly below 4%."
Now what !
It is like they have a rear view mirror approach rather than looking at leading indicators. Commodities are falling, fuel prices are falling, shipping price is falling, inventories are full to overflowing. Much of the inflation was import driven and will be correcting come the end of the year, unless there are new external shocks.
I dont think the price drops you talk about will reduce inflation by enough. The RBNZ are most concerned about the wage, price spiral that is happening and inflation becoming embedded. I think they might be bluffing a little about keeping the OCR high for so long, but they need to say that to influence peoples inflation expectations.
"In the MPS the RBNZ said while there is considerable uncertainty about the outlook for house prices, "the central projection assumes that prices will continue to decline until the September 2023 quarter".
at the current rate of house price falls that should see the market fully corrected back to pre covid levels (which was still in bubble territory)
Back in the day 5% mortgage rates was a benefit for working for a bank, at the time others we’re paying double digits. With inflation running hot the banks will need to raise rate’s 5% is the lowest level. Having low rates has just pushed house prices up beyond average wage earners affordability this is a debt trap which many will be paying for years. Loss of deposit a negative equity waits for anyone who purchased in last 5 years
Lol you got it.
Lowest ever rates + printing tons of money.. guess what people spend like crazy and prices go up.. called inflation (but they said it was transitory). Huge debts taken on.
All totally foreseable. Must be first year stuff on their economy degree.
Solution has always been to raise the ocr to kill demand. also first year stuff.
So totally they should have known, and should know. But they dont act like it.
"All totally foreseable. Must be first year stuff on their economy degree"
I think what we've been witnessing the last 10 years with excessively loose monetary policy and money printing will be taught to first year business students in the same manner that the Enron case currently is.
But I don't think the decisions that are being made by central banks is part of the 'economy degree' or whatever you are trying to refer to, but more a culture that has established itself within the central banks around the world.
They appear to think very highly of themselves, like they are playing god. But then also they are trying to prevent recessions from happening, when instead they shoud accept they will occur and shouldn't over or understimulate in either direction before during or after this. They are making the booms too big and then subsequently the busts!
I guess you rich pricks will again be happy about this.
You get your cheap lattes, and your investment portfolios and term deposits will go on the uptick again.
The rest of us, will get higher mortgage repayments, pay freezes, redundancies, higher rents, and pretty much a reduced standard of living in general, while you guys laugh all the way to the bank in your Ford Rangers.
Perhaps you guys and the RBNZ should just let the working people of this nation enjoy their increased share of the economy, and take one for the team for a change. You guys have been cashing it in for 38 years.
This year, two thirds of workers in this country got a payrise, and that rise was the biggest for 20 years. Why is it a bad thing?
I bet you all dont want them getting pay rises at all. Just budget better, and you might get to go for a holiday when you retire. F**k you all.
PAY FREEZES ARE VIOLENCE!
fullwasabi
About
Taking on the rich pricks at interest.co.nz -- they have had to too good, for too long. They get tax cuts, everyone else gets hospital cuts.
Member for
4 months
Maybe someone should divert some of the energy "taking on rich pricks" and put it into developing better skills (including interpersonal skills) to improve their lot.
Maybe they won't make it to "Ford Ranger rich", but might get to "Toyota Hilux moderately well off".
Wow. Looks like we are destined to burn the ponzi down one 50bp match at a time. Over 200 posts since 2pm and going strong. Are the speculative starting to sweat under the weight of financial gravity. Will National make it back in time to save them.
Wonder if any Labour MPs have started dumping their rentals yet?
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