Here's our summary of key economic events overnight that affect New Zealand, with news it is all about American inflation today, and the consequences of missing expectations.
The American annual inflation rate picked up slightly for a second straight month, to 3.5% in March, its highest rate in six months, and well above the 3.2% rate in February. And also higher than the analyst forecasts of a 3.4% rate. Of some concern is that the month-on-month rate stayed up at +0.4% (and almost a 5% annualised rate). Their core rate (sans food and energy) however, stayed down at 3.8% and unchanged, but a dip was expected here.
All up, this shows American inflation is far from beaten. Perhaps the Fed was expecting this because the minutes of its March meeting released today shows them wanting to see progress on the inflation front before they reduce their 5.25% policy rate. They are clearly not there yet as they suspected.
The USD rose sharply on the news, as did benchmark bond yields. The S&P500 fell as rate cut hopes for 2024 fade.
It may be all about the inflation miss today but there were other indicators out as well.
US mortgage applications were barely changed last week from the week prior, holding low to be -23% lower than the year-ago level. No rebound in the American housing markets. Their benchmark fixed 30 year home loan rate moved back up over 7% plus points, a one month high.
There was a rise in American wholesale inventories in February, but to be fair these overall levels in relation to sales activity are entirely 'normal' from an historic perspective.
Meanwhile the latest UST 10yr bond auction was well supported although perhaps marginally less than last time. Today's median yield was 4.47% compared to 4.10% at the equivalent prior event a month ago. Investors may be happy to buy this debt but they are seeking higher yields for it.
As expected, the Bank of Canada rate left its policy rate unchanged at 5% in its overnight review. It says it is confident inflation's trend is easing there.
Japanese producer prices rose +0.8% in the year to March, in line with forecasts and marginally higher than in February.
Taiwanese exports surged in March, more than making up for the February hesitation. In fact they delivered their best month since July 2022 and their second best March month ever.
In the South Korean parliamentary elections, the conservative alliance is suffering a big defeat with the Democratic Party alliance heading for a parliamentary majority.
In China, ratings agency Fitch has affirmed their sovereign credit rating as A+, but has shifted its Outlook from Stable to Negative. It cited the growing risks of China's public finance situation as fiscal buffers have eroded, especially from overstretched Local Government Financing Vehicles while Beijing deals with its stuttering property development sector. (Fitch rates New Zealand AA+, Stable. You can see how the various ratings agency codes compare here.)
And staying in China, vehicle sales rose a very impressive +9.9% in March from year-ago levels to almost 2.7 mln units in the month, following a -19.9% slump the month before. Consumption recovered following the Lunar New Year holidays and many carmakers slashed prices which has been effective from a sales perspective. China's EV exports, particularly to Europe, continue apace, but there are growing questions about whether these shipments will find buyers. The flood to there is overwhelming local manufacturers and they are not happy.
In Hong Kong, they have started deporting journalists, using their new "national security" laws recently imposed by Beijing.
The UST 10yr yield is now at 4.56% and up a sharp +19 bps from yesterday on the US CPI result. The key 2-10 yield curve inversion is deeper at -43 bps. But their 1-5 curve inversion is quite a bit shallower at -60 bps. As is their 3 mth-10yr curve inversion which is now at -86 bps and -16 bps less. The Australian 10 year bond yield is now at 4.25% and up +10 bps. The China 10 year bond rate is holding at just on 2.31%. The NZ Government 10 year bond rate is now at 4.75% and -8 bps lower since this time yesterday after the OCR review.
The S&P500 is down -1.2% on Wall Street in its Wednesday session, following the US CPI data release. Overnight, European markets closed marginally higher. Yesterday Tokyo ended its Wednesday session down -0.5%. Hong Kong was up +1.9% in its daily trade. But Shanghai was down -0.7%. Singapore was closed for a public holiday. The ASX200 ended its Wednesday session up +0.4%. The NZX50 ended up +0.5%.
The price of gold will start today lower by -US$13 from this time yesterday at US$2335/oz and off its all-time high.
Oil prices have risen +US$1 to just on US$85.50/bbl in the US while the international Brent price is up a bit less to just on US$89.50/bbl.
The Kiwi dollar starts today at just under 59.8 USc and down -¾c from yesterday all on the USD moves. Against the Aussie we are +½c firmer at 91.9 AUc. Against the euro we are little-changed at 55.6 euro cents. That all means our TWI-5 starts today just on 69.3 and down -20 bps.
The bitcoin price starts today firmer at US$69,348 and up almost +1% from this time yesterday. Volatility over the past 24 hours has been modest however at just on +/- 1.8%.
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83 Comments
A glimmer of light at the end of a horrendously dark and long tunnel. US President Joe Biden has said that he is considering a request from Australia to drop the prosecution of WikiLeaks founder Julian Assange. The country's parliament recently passed a measure - backed by PM Anthony Albanese - calling for the return of Mr Assange to his native Australia. https://bbc.com/news/world-us- Link
Brazil taking some tips off the CCP.
"This judge has applied massive fines, threatened to arrest our employees and cut off access to X in Brazil," Musk said when referring to a user's post, opens new tab on Supreme Court Justice Alexandre de Moraes' "free speech crackdown."
https://www.reuters.com/technology/x-challenges-brazils-forced-order-bl…
"As a member of the Brazilian Congress who has been exposing and combatting the abuses of our Supreme Court for years, I want to express my deepest gratitude to
. Elon, you are currently aiding Brazil more than many members of the Brazilian House and Senate. You are representing millions of Brazilians who oppose censorship and tyranny far better than their elected representatives, who still refuse to investigate and impeach Supreme Court justices."
https://twitter.com/marcelvanhattem/status/1777485881311396308
The modern political left are becoming increasingly authoritarian. We live in interesting times, I can't say I would have imagined where we are currently in my wildest dreams. Elon gets a lot of criticism but he is one of the few people, in a position of power, who is actively pushing back.
How did you manage to work out this was a leftist conspiracy? Brazil has been teetering on right-wing dictatorship for years and has only recently emerged from the Trump-style politics of Bolsonaro. Yeah, the same guy that advocated burning down the Amazon for cows & palm oil.
A quick read of Wikipedia suggests this judge is centrist - his affiliated party is PSDB - a social democratic party classified as advocating "Liberalism, Economic Liberalism".
It looks to me like he was concerned about 'fake news' via Telegram and via X - you know, the same Carrie Anne Conway "alternative facts" and hysteria that appears on Fox and Sky News Australia. Just because Musk chimes in doesn't mean his opponents are leftist or wrong - just look at his mindless opposition to Anthony Fauci (Chief Medical Advisor) and Covid vaccines.
This same judge prevented electoral intimidation at the last election - "On 30 October 2022, during the second round of the presidential election between Jair Bolsonaro and Luiz Inácio Lula da Silva, hundreds of roadblocks set up by the Federal Highway Police (PRF), under orders from the government, prevented voters from going to the polls in the Nordeste region of Brazil. de Moraes summoned the director of the PRF, Silvinei Vasques, and threatened him with imprisonment if he did not lift the blockades."
The only authoritarian tendencies are on the right mate. The same side that drives cars into crowds, wield M-16s in front of police and get away with it, and storm parliaments when they don't get their own way.
"A quick read of Wikipedia..." LOL. It's so cute when leftist blame the right for their tyranny.
So you are down with Brazilian members of congress being actively censored?
"By the way, I am one of the countless Brazilians featured in the files for being illegally monitored by the Supreme Court. I was also censored without due process and threatened with a hefty fine per day if I posted anything the Court disapproved of"
https://twitter.com/marcelvanhattem/status/1777485881311396308
https://twitter.com/shellenberger/status/1775516415023251835
You can keep your mindless "Left" & "Right" labels from the 19th century. Showing your age mate. Today those labels are meaningless - no one is nationalising the means of production or advocating imprisonment of the bourgeoisie. It's all variations on a market economy theme with shades of blue or red.
What we do have is weak trade unions, massive political donations from big business, politicians that govern in the sole interest of landlords, and a fear (mostly by folks over 65) of anything new that their mental capacity can't handle or that threatens their current demographic voting power.
You can keep your picked web links too - anyone can find stuff about the Patriot Act from post-September 11 2001 where the US neo-cons legalised widespread phone & web tapping. Seriously - you're citing Twitter as a source? ROFL
So you are down with Brazilian members of congress being actively censored and throwing people in jail for social media posts without trial, mate?
So, to get this correct, I can post from Wikipedia, but not from journalists with cited source documents or sitting congressmen? I can't use the terms left or right but I can use "US neo-con"? What is the correct age to be to comment on this website, so that I don't upset your sensibilities?
Seeing as you don't like twitter - is it ok to quote from red radio?
https://www.rnz.co.nz/national/programmes/mediawatch/audio/2018933239/p…
https://www.rnz.co.nz/search/results?q=brazil&commit=Search
The terms 'left' and 'right' have lost mch of their meaning but I am essentially of the western political left. I was always of the, perhaps naive, belief that the western left was better than this, and the more authoritarian types had right wing proclivities. We live in strange times because both sides of the political spectrum are becoming increasingly authoritarian.
I don't have time to address each of ypur points but I'm not sure I'd refer to Wikipedia as a source. Zero credibility.
My view is that instead of a straight line perspective the left wing (socialist) v right wing (fascist) argument is actually a circle. At the top is absolute power, diametrically opposite is true democracy. How they get to their largely self-serving goals depends on ideology. But the true power should be that of the people.
One way of looking at it (among many) is along a spectrum that spans fully collectivist to fully individualistic.
At the extreme right you have hardcore 'Ayn Rand' type liberalism.
To the left of that you have neoliberalism (still on the right essentially - very much individualistic).
Further to the left you have socialism in various forms (e.g. democratic socialism).
On the extreme left you have full-fledged communism.
The American annual inflation rate picked up slightly for a second straight month, to 3.5% in March, its highest rate in six months, and well above the 3.2% rate in February.
Brian Coulton, chief economist at Fitch:
“The so-called ‘Super-core’ CPI measure – services excluding rents – jumped from 3.9% y/y in February to 4.8% in March. This latter metric is heading the wrong way and quite quickly at that.”
David Kelly, Chief Global Strategist at JPMorgan asset management:
“I wish the Federal Reserve would pay more attention to what they do to financial markets with their manipulation of interest rates and not worry too much about what they are doing to the economy. Last decade, we mispriced housing terribly and now a large chunk of younger Americans can’t buy a house.” Link
Its exactly the same here in NZ - swap "supercore" for "non-tradeable" and we have exactly the same problem with insurance and council rates driving up inflation.
https://www.cnbc.com/2024/04/10/the-supercore-inflation-measure-shows-f…
US CPI super core +8.2% over the past three months annualized.
Something we almost never see acknowledged is that inflation represents a rate of change, whereas the demand suppression from high interest rates is an unchanging factor. A high inflation rate, even if not increasing, indicates steady growth in demand. A high interest rate, if held constant, does NOT have an growing effect on demand over time. So it won't effectively counteract the demand growth happening - to do that requires *rising* interest rates, not high interest rates.
Important to differentiate here between an economy like NZ - where our prevelance of short fixed term mortgages means we can hold the OCR constant for a year or two whilst still seeing average interest rates steadily increase in the background - and the US, where I understand there isn't so much of a lag factor. If the US really is seeing inflation maintaining momentum above target range, it's hard to see how holding rates constant will reverse that momentum.
The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990.
It's always been on the table. The US has long been acknowledged as the world's largest arms exporter. The issue is where all the exported arms end up. Look at all the terrorist organisations and groups, as well as most of the autocratic nations and see what arms their soldiers mostly use. While there are exceptions the most common weapon is the AK 47 or AK 74 or derivatives of them, Russian designed and maybe built RPGs and so on. So while it may suit some sectors to point the ju-ju bone at the US it is still Russian supplied weapons that are used by the fringe freaks.
Ukrainians are a mere cheap commodity to these savages - "It is extremely good value for money... Almost half of Russia's pre-war military equipment has been destroyed without the loss of a single American life. This is an investment in the United States security" Link
Pretty much I think that is a cop out perspective. While it might be true and despite to myriad conspiracy pundits, I still feel that that war is simply from Putin's crazy personal aspirations. It may also be true that there is US fiddling on the sidelines to manipulate some of the direction this is taking (Nuland is PDKs favourite), in the end if Putin hadn't wanted to invade Ukraine, as he did in Georgia, it would never have happened. But now thanks to US Republican shenanigans there is a real risk that Europe may well be enveloped into another continental war. The European's have finally woken up to the threat I have raised since the beginning. They are simply not prepared for that level of threat without US backing, and there is a strong indication that the US is fracturing and will not be sufficiently united to stop further escalation.
But the US needs to understand, while during WW2 the technology did not exist to enable the belligerents to easily reach the US mainland, today that is no longer the case, and even ones once considered not a real threat can reach out and smack them hard. 9/11 proved that.
The war in Ukraine is lost. The best outcome we can hope for now is for Zelensky to be replaced with someone who accepts that and opens negotiations with Russia. Russia is open to it.
Yes, it will be a major blow to the west, but the blow already happened. It's also no good blaming Putin's madness for the situation - madness is to be expected from global leaders. The west must accept a good deal of the blame for this war. The provocation was intense. Putin was there when promises were made to Gorbachev that 'Nato would not expand any closer'. Putin tried for years to negotiate and raise this but was ignored (even trying to join Nato at one point!) - right up until the week of the invasion.
Russia do not want to govern Ukraine. They want their buffer that they were promised by the west. If peace negotiations are put off now, don't be surprised if Russia decides Odessa is next. Where will that leave Ukraine?
This is all very ugly and of course unjustifiable, but that is the nature of geopolitics and Russia has shown the west that they are much better at it. Not only that, but Iran and China are also demonstrating that they are better at it than the hubristic west.
Israel are clearly losing their war (no goals achieved, retreating from Gaza, less secure now than pre-Hamas attack, diplomatically isolated, popular sentiment against them). Iran's strategy is working better than they could have hoped for. Old lines between Shia and Sunni are becoming irrelevant (remember Hamas is Sunni, Hezbollah Shia). Turkey and Saudi Arabia are repairing and strengthening ties with Iran.
The real dangers for the west are Netanyahu getting desperate to drag the US into a wider war and being pulled further into an unwinnable Ukraine war. The dangers are not Iran and Russia. Both are clearly not interested in wider war and are open to negotiation. If the west don't accept that the world is changing they are only going to make matters worse for themselves.
As for the danger to Israel that Iran represents, you have to ask yourself - what is Iran's actual policy here? If you listen to western politicians it is to 'destroy Israel'. If you listen carefully though, you'll notice that they always refer to 'the Zionist regime/state/entity'. Their policy also is not to support a two state solution (though they may in the interim). The Iranians are clear about wanting a one state solution where that state is not Zionist. That is it. It is - in the long term - the inevitable outcome.
I think Israel as a Zionist state will not exist 15-20 years from now (possibly sooner). The best outcome would be something like what happened in South Africa. A new non-racist regime and equal rights for all that live there, along with trials that bring to justice all (on both sides) who have committed atrocities during the previous regime. In this regard, I think Iran is on the right side of history (as much as I dislike their own theocratic approach - but that is beside the point).
Interesting take and very interesting times but not sure that the outcomes of South Africa (or zimbabwe and most of the rest of Africa) would be considered a great result for the people.
and just maybe the Ukranian's back their current leaders and do not want to surrender -the ones I communicate with are certainly in that camp
It is also possible that the Mullah's and Putin will be undone by the will of the people - those outcomes are usually a slowburn
Excellent summary from earned income.
1. Russia seeks to protect Russian speakers in Southern Ukraine. They did not make it into a geopolitical war.
2. Iran has endured more far insults and aggression than it puts out.
3. Israel. It's doing exactly the wrong thing if it wants to survive.
On your third point, I think Israel is acting in a way that suggests they know that the Zionist project cannot survive unless something drastic changes. They are demonstrating that they are prepared for others to pay almost any price for that change. They also know that the kind of drastic change they need relies on the current western military dominance. That dominance is diminishing rapidly so I suspect there is a sense of 'now or never'.
Netanyahu is not wrong when he says current circumstances represent an existential threat for Israel. The bit he leaves out of course is that it is an existential threat for Israel as a Zionist state.
Certainly that's one way to interpret it.
But this really gets to the crux of the matter. What is a state other than a group of people under one government? What should we say of a state that represents some people, but not others that it governs? We've fought long and hard in the west to move away from this type of government. We are hypocrites with regard to Zionism.
In the longer term, I can't see it going any other way.
The two state solution has always been just a useful talking point to be ignored in practice. Israel has made it clear that they do not believe it is possible for them exist within the 1967 borders. They will never accept it - they'd rather WW3.
There are at least two political movements in Israel that advocate for a single state with equal rights for all. One of which includes Palestinian members. They have interesting ideas but the political climate just isn't in their favour.
The trouble is that the right wing has been on the ascendancy for a long time in Israel. It's a vicious cycle. As Israel undermines it's own security and people get more fearful, hardliners get more support. It's a strategy of traveling down a one way road. The right in Israel have been undermining the ability of a left to even exist. I know this word gets thrown around a lot, but Israeli politics has become fascist. This is reflected in the shift from relying on support from the US Jewish population to relying on US evangelicals. Netanyahu could see some time ago that the way left/Democratic politics was going was entirely incompatible with supporting a colonial ethno-state. Hence the shift in focus to the US right and away from those that supported Israel on the basis of historical justice.
The Israeli right have now got what they wanted. Crunch time. What will remain in the aftermath is unknown. It's very unlikely to be two separate states though.
Great response EI! But I'd challenge a part of it. Gorbachev was the old Soviet Union (while it is true it collapsed on his watch), but then the USSR collapsed and the world changed. NATO's expansion was because those former Soviet states understood the threat and asked to join. The bar to join NATO is quite high (Ukraine has been rejected several times). So I'd suggest your rationale there is flawed. For Putin to use that as a justification is grasping at straws, and as has been demonstrated his actions have proven to be a very good recruiting tool for NATO. Finland and Sweden, two countries who used to be staunch on their neutrality have now joined NATO too. Putin will have understood that NATO never was an expansionist agreement, but rather a purely defensive one. Although NATO forces have been involved in UN sanctioned actions they have never invaded a foreign country, but Putin has. If they wanted peace why do they need a buffer from NATO?
I agree Israel is losing, but tend to think that is more about Netanyahu than anything else. The Arabs as a group have pretty much always been anti-Israel, although recent accords are more about political expediency and recognising geopolitical forces.
I suggest that there is plenty of evidence for Iran's aspirations for their theological leadership to become the dominant Islamic power in the region. To me it looks like they are using every tool they can find to increase their influence, clout and power.
NATO's expansion was because those former Soviet states understood the threat and asked to join
Doesn't change the fact that the west broke their promise. Breaking promises is a great way of reducing trust and security.
If they wanted peace why do they need a buffer from NATO?
Because war is always a possibility. But also, Nato represents more than just a defensive alliance. It comes with economic and political ties. Basically, the west has been steadily encroaching on Russia's sphere of influence for a long time. Nato membership cements that in place. You're assuming they want peace. What they actually want is influence.
I agree Israel is losing, but tend to think that is more about Netanyahu than anything else.
It goes much deeper than Netanyahu. Israel's right wing (okay, mostly Netanyahu) has put them on a path of no return, deliberately.
Just wanted to clarify something regarding this:
Gorbachev was the old Soviet Union (while it is true it collapsed on his watch), but then the USSR collapsed and the world changed.
The promise to not expand Nato into eastern europe was made was during the collapse (i.e. during negotiations - it was a deal with 'the new Russia').
What was the other side of the deal?
It is one thing to suggest that NATO broke their promise, but what was the basis of that promise? Was it based on a stable democratic Russia that complied with international laws and standards? How was it documented? The world changes all the time and therefore the assumptions that underlie such promises can quite easily be rendered no longer valid. Under Putin's rule Russia has become increasingly belligerent towards it's neighbours and others. It has got away with it because of the European dependency on its energy reserves , but that doesn't change the fact that the Russia when that 'promise' was made would be very different to the Russia today.
What was the other side of the deal?
Have a listen to Colonel Lawrence Wilkerson on the subject: https://youtu.be/OdU_egbDv8c?si=GD8ht7L2EH4F_MCA&t=845
How was it documented?
As mentioned in the talk above, it wasn't.
How would you describe Putin's motivations? I'm open to being convinced.
If you're struggling to come up with any explanation that make sense, that's probably because the usual western narrative doesn't offer any. That's deliberate.
We are victims of a politically self-censored media that thinks it is dangerous to explore the wider picture. As with Gaza - it all began on October 7th, right? And the Houthi's actions in the Red Sea have nothing to do with Gaza, right? Notice how no western leader ever refers to what motivates the Houthi actions. Or if they do offer reasons they expect us to believe they are just a bunch of puppets with no agency.
I have no love for Putin, but lying to ourselves about what is going on and how we got here is just plain stupid.
Russia and China are wiping the floor with us politically because we can't be honest with ourselves. It's embarrassing to watch.
Plainly, he wants to take over the Ukraine. He will kill millions if he does(and deny it, and or call them Nazis) Has been at it since 2014.Nothing to do with Russian security.Ukraine did not, believe it or not, invade Russia.
Nato exists to prevent Russian imperialistic invasions, not to invade Russia.
Already it is likely that 250000 men have killed each other, with massive civilian casualties and huge property and environmental damage.
Quite simple really, no excuses whatsoever.
Yes the war in Ukraine is lost but the war in Gaze is all but over, the place has been reduced to rubble in case you have not been seeing the pictures, its a war Israel cannot lose, its about as one sided as it can get in a modern conflict. Israel has smashed the shit out of Gaza its now unliveable, the Palestinians would be advised to leave. If I could click my fingers and make it happen I would dump all of them in the middle of Iran with their guns and see how well they get treated.
Yeah nah, but it is all about politics, Biden is now in panic mode because the balance of power in the USA is so fine he cannot afford to lose any votes to vocal protests. The USA is still selling arms to Israel and so is Germany coming in second place, the worlds totally messed up on a grand scale the USA supplying aide on one hand to Gaza and weapons to Israel on the other. The final straw will be Trump getting back in come November.
Trump may not be the disaster everyone claims (with regard to the Middle East).
He has already made allusions to bringing Iran in from the cold. He has said he wants to include them in the Abraham Accords. They won't want it of course, but the important thing here is that Trump will negotiate with Iran. Israel is very unhappy about this.
He is also unlikely to put up with Israeli humiliation and disrespect (his ego wouldn't allow it). Unlike Biden.
He has recently said he will "bring peace to the Middle East". Doubtful, but also doubtful that he would be as easily led into a wider war as Biden might.
His claim that Israel must end the Gaza fighting as soon as possible was not at all welcomed by the Israeli interviewers. This was often reported in the west by focusing on his statement that Israel must find a 'final solution' - but this is most likely just Trump's terrible way with words. The important bit is that he is likely to take action to end the fighting.
Trump also holds a real grudge against Netanyahu and a grudge for Trump is usually acted upon.
On top of this he claims he will push for an end to the fighting in Ukraine.
Honestly, I detest the guy, but he's looking objectively better than Biden with regard to peaceful outcomes.
People get hyped up over Trumps personal carry on. But in terms of what he actually does he can do ok. Key was his intention of "no more stupid wars" He was blocked from achieving that. eg. the nutjob USA occupation and protection of ISIS in Syria. When you look at the US record of stupid wars you have to think Trump is on the ball.
Mind you he withdrew from the Nuclear agreement with Iran. Which was a major mistake. The USA hassling Iran has been the thing and just leads to ongoing trouble.
Cannon fodder?
- Former Nato supreme allied commander James Stavridis suggested the military alliance recruit Asia-Pacific countries that share ‘its vision of freedom’
- His list of potential allies with a similar view on democracy, liberty and human rights also included Australia, New Zealand and South Korea
Judge others by what they do and not what they say. This long talk of rate cuts seems more about hope to placate the masses. The USA know they are running it hot, esp when you factor in govt spending. NZD under 60c, my power, fuel and water going up again. Barring another financial crisis I don’t see how the rbnz will be able to cut rates this year.
RBNZ careful to point out yesterday that the upside risks to inflation are oil prices, insurance, govt rates, and utility costs. All of these things are notoriously insensitive to domestic demand.
RBNZ also noted that 'they remain confident that monetary policy is restricting demand. A further decline in capacity pressure is expected, supporting an ongoing decline in inflation'.
So, RBNZ are basically saying that they are going to send demand-sensitive prices into freefall to offset inevitable rises in the prices of things that are demand insensitive. Is that RBNZ telling us that they are going to rely on liquidation sales, stock sell-offs, mass layoffs etc to 'tame inflation'? Do they not appreciate that most NZ businesses will down-size, reduce staff, scale-back their import orders etc to adjust to lower demand - until they hit a tipping point (where many are now)?
This recession got away from RBNZ and Treasury months ago. This will go down as one of the worse periods of economic mismanagement in NZ history.
The chances of New Zealand being in the 1-3% CPI range at the latter part of the year are looking decidedly slim.
I would even go as far as saying Q3 here could still even have a 4 in front of it, especially if our dollar drops further with any continued delays in the FED dropping their rates.
We also have the April 1st 2024 power price increases, and the continued surge in rate/insurance prices to factor in (the non-tradables component is very sticky).
At best we'll be in the high 3's.
I agree and also think contention of resources for climate change adaption and mitigation adds base points as well... If they are solely focused on staying below 3% we may be at this OCR setting into 2025. There may be some political pressure once the reality of the necessary risk asset repricing becomes apparent.
Agree...potentially the mid-point will eventually move to 3%?
These 'new' climate change costs/charges impact a vast range of goods and services, and are almost 'baking' in significant percentage points to the default CPI measure (especially Insurance/Rates/Electricity/Transport/ etc).
It's a big club and you aint in it. Wonder if Adrian Orr gets a subscription.
An economist from the Bureau of Labor Statistics corresponded on data related to a key US inflation gauge with major Wall Street firms like JPMorgan Chase & Co. and BlackRock Inc., raising questions about equitable access to economic information.
https://www.bloomberg.com/news/articles/2024-04-09/jpmorgan-blackrock-a…
How could that be? The government keeps telling us that the books they inherited are a shambles
It 'can be' because ratings agencies are largely based on consensus with developed countries, particularly in the Anglosphere. NZ is a lap dog when it comes to economic orthodoxy.
Compare that to China where they slam ratings agencies stating bias and methodological flaws.
But wait, there's more! Higher For Longer is slowly morphing into Higher Forever, as more people realise that the neutral rate is now much higher than thought, thus the terminal rate will need to be too.
https://www.zerohedge.com/markets/hot-hot-hot-and-then-there-were-none
Either that, or central banks globally raise the target inflation band to 2-4%. Either way, its going to hurt.
I have long been of the opinion (and vocal about it), that Central Banks will be forced to accept higher inflation targets. Inflation is not going to return to 2% without holding interest rates at current levels for much longer or even increasing them further, which cannot be done in the longer term, as economies will tank (and are already well on their way).
Gove "I think the people of this country have had enough of experts with organisations with acronyms saying that they know what is best and getting it consistently wrong." was right in the end.
"Britain has become the world's fourth largest exporter, fresh figures have shown - overtaking France, Netherlands and Japan - despite warnings that international trade would fall off a cliff following Brexit."
Sensible types, please avert you eyes, as I link to the Daily Mail.
https://www.dailymail.co.uk/news/article-13293237/brexit-Britain-bigges…
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