In this section
Offers for readers
Follow the news from interest
The comment stream
Recent comments
- 1 of 20773
- ››
Editors choice
- 1 of 294
- ››
Finance sector jobs
Reporting to the Senior Manager Operational Risk Effectiveness and Assurance, the key focu...more
New Zealand
Reporting to the Head of Finance - Retail and Business Bank the key focus of this role is ...more
New Zealand
This role in consultation with the Financial Controller provides financial, strategic and ...more
New Zealand
If you are motivated by the prospect of seeing the big picture, developing your team and m...more
New Zealand
The news stream
Latest news
Most commented
- BNZ cuts most fixed mortgage rates 46
- 90 seconds at 9 am 43
- English wants more house builds 30
- Fonterra cuts payout forecast 30
- Budget tax moves to target high income NZers 29
- Wednesday's Top 10 with NZ Mint 24
- Amanda's Take Five for Wednesday 22
- NZ to borrow more if crisis worsens-Key 19
- Thursday's Top 10 with NZ Mint 18
- 90 seconds at 9 am 16
Most viewed
Opinion: RBNZ needs to be quiet and let the market rule
By Roger J Kerr The RBNZ are "disappointed" that the banks have not passed through to customers the recent reductions in official interest rates. The RBNZ also considers that they still have "leverage" over the behaviour of investors/borrowers in the economy with interest rate changes. These comments suggest that the chaps and chapesses at the Reserve Bank are more out of touch with the banking and interest rate market than we previously thought. As commented on last week, the banks' costs of funds have not reduced very much at all due to the reduction in the OCR to 2.5%. The market reality is that retail and wholesale depositors into banks are not accepting interest rates much below 4.00% and the banks are prepared to pay up to get the cash in the door. Monetary policy has lost its potency and effectiveness and the Governor and his deputies have to recognise this reality.
Most of the volatility in swap interest rate markets over the past three months has been caused by changeable RBNZ statements on the economy and interest rate levels. The best monetary policy stance the RBNZ can take now is to do and say nothing i.e. let the market rule. The 11 June Monetary Policy Statement will be the next major date for the RBNZ view on the economy. Hopefully by then they will have a better understanding of where borrowers and investors are actually meeting and transacting on the price of money in New Zealand today.
"”"”"”"”"”- * Roger J Kerr runs Asia Pacific Risk Management. He specialises in fixed interest securities and is a commentator on economics and markets. More commentary and useful information on fixed interest investing can be found at rogeradvice.com
“Monetary policy has lost its
"Monetary policy has lost its potency and effectiveness"¦"
talk about stating the bleeding obvious Roger
""¦and the Governor and his deputies have to recognise this reality."
I think it's our law makers that need to recognise this reality and to START DOING SOMETHING ABOUT IT (sorry for shouting).
“Claims banks are not passing
"Claims banks are not passing on lower interest rates to businesses and other customers are backed up by figures released this morning by Statistics New Zealand."
From NBR "Banks not passing on rate cuts"
http://www.nbr.co.nz/article/banks-not-passing-rate-cuts-102515
neil c - the problem
neil c - the problem reported is NBR is seems to be becoming more and more obvious:
http://www.interest.co.nz/ratesblog/index.php/2009/05/14/have-your-say-n...
What's is not so obvious is any effective action from Bill E or RBNZ?
Thanks Les, I have bookmarked
Thanks Les, I have bookmarked that thread as well. It is disappointing to see that Bernard appears to have chosen not to respond to your and Selwyn's comments. Speaks volumes I suppose.
Neil, we should meet at
Neil, we should meet at some stage. As should other on the threads re creating a Productive Economy. We are out gunned and out flanked but we can still influence and ask the hard questions. Bernard you are forgiven but not forgotten. Unless people start saying this is wrong and doesn't have to continue then it will. Keep it up Neil C. Selwyn
Market rule, as you call
Market rule, as you call it, is exactly what we have for last 25 years or so, and where are we now?
Anyway, market rule, as a such does not exist. Market is under close watch and tight control of small group of people, and nothing in this world just happens to be...
The market has been gradually
The market has been gradually moving the basically decent majority into a box cannon since 1694. Roger is saying the gate is nearly shut, we might as well throw in the white towel. Laissez Faire, Caveat Emptor ah Rog, anything goes, buyer beware. I say you ain't got that gate all the way shut yet.
I should reiterate that I believe the idealism of Democracy and Capitalism are the best yet, but they are not currently being delivered as they were sold in the prospectus. They have been subversively infiltrated and converted into a wealth transferring pyramid scam. The elite few who have used every dirty trick in the book to funnel the massive amounts of excess created credit into their own hands have used those funds to achieve near economic domination, as evidenced by Rogers victory speech.
If the markets ruled the
If the markets ruled the banks would have all been shut last October.
The banks operate under guarantee from the RB.
Sooner or later bank profits will be understood for what they really are.......a gift from the public.
The outlook for the global
The outlook for the global economy :
" "self-reinforcing mix" of de-leveraging, de-globalisation, and re-regulation"
http://www.nbr.co.nz/opinion/michael-coote/outlook-global-economy-hardly...
Sorry Roger you are shouting in the face of a massive free market retreat.
Bernard maybe you can ask
Bernard maybe you can ask Roger or Roger might like to answer himself. Roger being on the three person advisory board of the NZ Debt Management Office, could he please explain the roll of Northern Trust within or over the top of the NZDMO;
http://www.voxy.co.nz/business/northern-trust-appointed-global-custodian...
as I have had it explained to me that as are our govt bonds are now written into existence and future taxes pledged, the bonds now go into trust of Northern, who just happens to be one of the largest central banks in the USA. This central bank on its website claims to have $9 trillion dollars worth of assets under custody worldwide.
Could you guys please find someone to fully explain this to the wider population of NZ as it hardly got a mention in the mainstream media. It is still not mentioned on the NZDMO website to this day. Nor does it show up in any search done on RBNZ or Treasury.
Please tell us just how far down the track of liquidation we are at the hands of the internationalist receivers?
Roger is right about the RBNZ being any longer able to set credit conditions within this nation as made clear in this statement from NZDMO;
From 7 April 2007, the New Zealand Debt Management Office (NZDMO) has assumed responsibility for the tendering of New Zealand Government Bonds and Treasury Bills from the Reserve Bank of New Zealand (RBNZ), which had previously acted as an agent for the NZDMO for many years.
http://www.nzdmo.govt.nz/securities/tendering
Something seriously fishy is going on behind the diplomatic curtain in this country, please Roger tell that I am wrong, with supporting evidence of course.
neil c, et al -
neil c, et al - Alex has reported the PPI report here:
http://www.interest.co.nz/ratesblog/index.php/2009/05/18/lower-oil-price...
It's disappointing given the nature of the bank profit/gouging discussions held on Interest .co.nz, that the area highlighted by NBR warrants little more than:
".....although most banks are yet to pass on recent cuts to floating mortgage rates and deposit rates."
here on Interest.co.nz, in an attempt to judge RBNZ's likely reaction to the PPI report regarding inflation outlook. Especially noting that other areas of the PPI report were clearly cited.
And while The Press has all this as:
"Inflation is cooling fast, with industry output prices down a record 1.4 per cent in the March quarter, according to Statistics New Zealand.
But banks are bucking the trend with much higher profit margins, according to figures. Bank profit margins rose almost 15 per cent in the last three months, the biggest jump since the series began 15 years ago." Here:
http://www.stuff.co.nz/business/industries/2421516/Banks-profit-margins-...
Why is that?
This is NZ. We don't
This is NZ. We don't believe in supply and demand laws especially when it comes to capital. Hell no, our govt knows a trick or two about how to sidestep such minor matters as raising a hundred billion overseas so we can carry on with the great Kiwi property splurging madness. These tricks are a big secret of course. Not for your average punter to know. Our central bank is beavering away at flooding the joint with fresh cash which they swap for bits of paper, so the banks can carry on the great game of porking the economy to hide the truth. We love having the truth hidden from us. It's the Kiwi way of life. "Debt, we want more debt" the crowds scream.
Followed by "inflation, we want more inflation to wash away our debt"
Meanwhile out at the airport arrivals lounge a mob are tearing the immigration gates down and screaming "let them in, let them in" "we need them, we need their money"
Don't ya just love it?
"The RBNZ are “disappointed†that
"The RBNZ are "disappointed" that the banks have not passed through to customers the recent reductions in official interest rates."
"Monetary policy has lost its potency and effectiveness and the Governor and his deputies have to recognise this reality."
Well the RBNZ used to have some bite, then many of their powers, which where originally put in place for just such occasions (Boom and crash)and prevent excessive profit taking, and protect the public and investors from themselves where taken away.
So all it can do now is wave its arms around and look stupid in their powerlessness
"The best monetary policy stance the RBNZ can take now is to do and say nothing i.e. let the market rule"
And the very same "market rule" that has caused such a huge artificial boom and recession.
Under current circumstance that IS what is happening, and all the arm waving by the RBNZ is just that.
RK ...once again you state the obvious, and it is very easy to criticise from behind the office desk....I see nothing here that addresses the problems your are so concerned about...or put another way, shallow thinking.
"RBNZ needs to be quiet
"RBNZ needs to be quiet and let the market rule". This statement is akin to saying let the criminals run the prison. There is no so-called free market. The government and the banks are playing good cop, bad cop while the gap between savings interest rates and mortgage interest rates widens, and New Zealanders are coerced into more debt.
“Sooner or later bank profits
"Sooner or later bank profits will be understood for what they really are"¦"¦.a gift from the public."
Dead right, banks have been given all the privileges monetarism confers but operate according to a "free market" mantra where maximisation of profit (for foreign shareholders!) is perfectly legitimate.
Raf "“ I find your posts are often very informative. You have posted elsewhere on this site about the "inevitable reform of the banking sector" and "nationalisation of the money supply" (sorry if I'm paraphrasing). I would be interested to know what degree of economic meltdown you think needs to occur before something like this takes place. Alternatively if you think reform can take place incrementally what would constitute a "first step" in the right direction that wouldn't cause the current financial regime to choke on their spreadsheets?
Selwyn "“ sounds good (we have NZ's best Italian restaurant around the corner!). Have sent my contact details to pec "“ please let me know if that's wrong.
Neil, Thank you. I'm hoping
Neil,
Thank you.
I'm hoping that there wont be an economic meltdown though we came very close back in October 2008 to that event.
The good news is there are a few small steps that can be taken. In fact there is a proposal that has been put to the finance minister to do just that.
it involves directly injecting new capital into Kiwibank (fresh money from the government).
as well as issuing e-notes directly into circulation.
this is possible, it's very simple to do and doesn't cost a bean. It does directly increase the money supply but at the moment system liquidity is falling and so this is not a concern.
the main goal is that we must domesticate our money supply. our gdp for many years has simply been borrowed.
that must end now if we are to avoid ending up like Iceland.
The currency can take the strain.
once we have control over our own money supply then we can stabilise it and start to build a more sustainable productive economy which is not constantly squeezed by the horrendous interest bill to our overseas owners.