Bernard : Unlike a proctologist , I cannot look up Youtube . Whatever happened to the previous format for your videos ? ( some of us still have the old steam driven computers , gotta light a small fire to warm up the hard-drive ) .

Bit late - interest rates are rising. Maybe you should have your crystal ball serviced.

Well I don't think raising interest rates any time soon would be terribly wise. Having got everyone in hock up to the eyeballs surely it's in "the banks" interests, excuse the pun, to keep interest rates at a level they can afford to pay if at all possible?

@Bank Manager: Why?

I think you guys just like bubbles. Its a bit like peeing on yourself to keep warm.

Chris_J - the inverse of the 2003 mistake is to do what the US did after the tech bubble - create an asset and lending bubble so ruinous it may potentially take a decade to fix.

IanC: The RBNZ's 2003 mistake was to loosen (cut rates) in an already booming and strongly growing economy (house prices were up about 30% in the previous 18 months) - the reason given for this was the risk to the global economy from SARS (which seems absurd in hindsight). Essentially this is the same type of problem as the US keeping interest rates low for too long after the tech bubble burst.

The inverse would be tightening policy when keeping it loose is what is required.

Already the MCI is tighter than normal - hard to believe with an OCR at 2.5% but true. The steepness of the yield curve is just wrong - as it was in mid/late 2008. Time will tell but I think that Bollard if he makes the wrong call tomorrow may be forced to do the only thing he can over the months to come and that is cut the OCR even further. We'll see.

@Bank Manager: I'm with you on that but if an outfit like Citibank goes it will be sooner. Anecdotal evidence: WINZ was very busy in Christchurch yesterday, queues and queues; properties in Chch that didn't sell last year are being put back on the market with same overpricing; auction popularity is soaring here (don't know about the outcomes); graduates are doing postgrad study rather than go on the dole; renovation is roaring away --I can't entice a sparky to come around for a smallish job. It all adds up to me to: property silliness is back and young people are getting hammered. Blood looks likely to me.

My mistake Chris - wasn't thinking too carefully about it.

Does this mean you think the economy is precarious and a rate rise would kill it? This is kinda inconsistent with your position in other posts ---> that things are much better than people on interest.co.nz believe/expect. Maybe I've misunderstood what you think.

ps - in middle to upper income Auckland, the house market is exhibiting bubble characteristics again.

IanC, you know from my other posts that I think the economy is on the mend and that the housing market has bottomed. But it's all far too fragile to risk raising interest rates anytime soon.

The tightening of monetary conditions that has already occurred at the medium to long end of the yield curve, is more than is justified by current economic conditions, further tightening right now is not necessary - there is so much slack in the economy that the only reason for tightening further would be to try to send us back into recession (BH's goal!).

Unfortunately the chances of Bollard misreading the economy again are high. Remember their predictions in March of the kiwi$ going to US45c and house prices falling 18%? Don't forget Bollard made the keep it low until late 2010 when the dollar was US50c and the 5 year fixed rate was 6.5% - look at how this has changed things for the worse for the broader economy despite an improvement in asset prices and consumer confidence.

It amazes me how the doomsayers (BH) continue to say how bad things are but then go and advocate making them worse by raising interest rates.

To be honest if Bollard doesn't keep his promise tomorrow, I'll be canning a couple of the building projects we were planning to get restarted over the next few months.

Mark my word, if Bollard raises early, he'll end up dropping rates again in 2010.

IanC, "To be honest I consider he (we) are stuck again between a rock and a hard place"¦. we seem to be reasonably firmly back on a path to growth via imbalances. Without wishing to be too firmly put in the doomsayer category, my humblest of opinions is that each step we take in the direction we're going has to be paid for at some stage." - Yes indeed.

You should only be afraid of interest rate increases if you're carrying too much debt! That's a personal decision each person makes - how much debt am I comfortable with? Factor in interest rate increases, loss of job, sickness etc. Not wanting to be a doomsayer, but people need to take responsibility for themselves. All low interest rates do is encourange people to take on more debt. How is that a good thing? Especially when it's primarily for overpriced houses! Who wins in that situation? The Banks and the RE agents. Not the economy or the average Kiwi.