Here's our summary of key economic events overnight that affect New Zealand, with news the RBA governor has set some specific limits to where pay rises shouldn't go - to avoid monetary policy consequences.
But first up today, the dairy auction brought slightly lower overall prices, down -1.3% in USD. But our lower currency turned that into a +0.9% rise from the prior event in NZD. In a reverse of what the derivatives market signaled, WMP prices dipped a little while SMP prices rose. The big mover however was the Cheddar cheese price which dived -9%. Volumes offered and sold were modest in the big scheme of these auctions. Nothing in today's result is by itself going to change farm gate payout prices but todays slip in prices is the sixth in the past seven events and since mid-March when this slide started, overall prices have fallen -9%. However, from the start of the 2021/22 season in August, prices are up +21%.
In the US, analyst talking heads are out in force warning of recession. But financial markets are ignoring those.
Meanwhile, the Chicago Fed National Activity Index fell to an eight-month low of +0.01 in May from April. Production-related indicators dipped sharply, while the contribution of the personal consumption and housing category fell as well. But jobs, sales, and new orders all rose on that same basis.
American existing home sales activity continues its slide, recording sales at the annualised rate of 5.4 mln units in May, a heady drop from the 6.5 mln rate in January. From a year ago, that is an -8.6% retreat. It is the modestly-priced end of the market that is falling fastest, so the median price is getting skewed to more expensive houses and is up almost +15% in a year, with the median breaking above US$400,000 for the first time ever (NZ$630,000).
North of the border, Canadian retail sales beat estimates in April and are now +9.2% higher than a year ago. Much of that may be inflation's impact however. But not all, so there is 'real' growth in volume terms.
In China, its the rainy season and flooding is back. It is hard to know whether it is worse this year of not, but it is extensive - just as it has been in many previous years. It certainly looks bad.
And the Chinese military is much more active, flexing its new muscular power with air and naval activity around Taiwan. And in a new development, is using its naval forces to sail close around Japan. But just as the Russians found, this isn't deterring those targeted. They and others are rushing to build up their capacity to defend themselves. Just what China though it would achieve by these chest-thumping moves isn't obvious. It is turning its backyard against it. But at least it does distract its domestic audience from its economic misfires.
Hong Kong inflation is failing to fire as demand stays very weak. It rose just +1.2% in May when a +1.6% rise was expected.
We've noted it before, but the iron ore price continues to weaken. In fact it is now at its lowest point on the year as Chinese stimulus demand just isn't eventuating. A good dose of over-optimism is being unwound.
Also falling is the price of wheat and that is despite the ongoing export issues from the Black Sea. Coordinated international efforts are having an impact to reduce the impact of that supply, despite Russia's best efforts to choke off Ukrainian sources.
In Australia, their central banks has been out explicitly warning of the consequences of excessive pay hikes. Anything over +3.5% is a problem for them they say and have warned regular pay rises of 4% to 5% risks entrenching higher inflation and bringing tougher monetary policy measures. (These warnings were in comments after the speech, not in the speech itself.)
The UST 10yr yield has started the week in New York at 3.31% with a +8 bps rise. The UST 2-10 rate curve is marginally steeper at +10 bps and their 1-5 curve is flatter at +44 bps. Their 30 day-10yr curve is also steeper at +221 bps. The Australian ten year bond is down -5 bps at 4.07%. The China Govt ten year bond is unchanged at 2.81%. And the New Zealand Govt ten year will start today +2 bps up at 4.25%.
On Wall Street, the S&P500 is roaring back with a +2.5% rise to start their week post-holiday. Overnight, European markets ended up +0.5% and building on Monday's gain. Yesterday, Tokyo ended up +1.8%. Hong Kong ended up +1.9%. But Shanghai slipped -0.3%. The ASX ended its Tuesday session up +1.4% and the NZX50 ended up +1.1%.
The price of gold ended yesterday at US$1834/oz and down -US$2.
And oil prices are little-changed from this time yesterday to just over US$109/bbl in the US, while the international Brent price is now just over US$112.50/bbl.
The Kiwi dollar will open today at just on 63.4 USc and +20 bps firmer than this time yesterday. Against the Australian dollar we are softer at 90.9 AUc. Against the euro we are also softish at 60.1 euro cents. That all means our TWI-5 starts today at just under 71.3, unchanged from this time yesterday.
The bitcoin price has moved up strongly from this time yesterday and is now at US$21,226 and a gain of +6.8%. Volatility over the past 24 hours has been very high again at +/- 4.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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132 Comments
Why does no one talk about the RECORD profits companies have been reporting?
Why does almost no one talk about the supply deficits out of China that are impacting availability?
If both of these things are true, why do we relate price inflation only to wage increases?
Maybe instead of the average employee and consumer taking all the pain businesses could have their price increases capped to their temporary costs increases until supply chain issues resolve?
I know this might sound radical, but yeeesh...can we not act like human beings with logic, reasoning and conscience capabilities far beyond our most intelligent wild peers?
"Look, massive centrally driven wealth transfers to asset owners are one thing - and well and good - but we really can't be having wage rises for the plebs. Not okay!" - central bankers.
Sheesh, no wonder society starts to have serious social and crime issues. The fish rots from the head.
Maybe pay cuts across the board would be a better method to ease demand rather than increasing interest rates excessively above "neutral"?
Income reductions could start at 0% at the bottom and increase through bands up the pyramid to a 50% reduction at the top.
The "market" has to respond?
It wasn't just PLAN ships, but elements of the Russian navy too. And Putin has threatened Kazakhstan and other former Soviet states if they defy Russia. More proof the guy is a nutter. He has to be stopped. He is taking the world into a morass of war and has the ultimate weapon to use if he doesn't get his way. No one really knows what his trigger is, but unless he is removed that outcome may be unavoidable.
Putin has been conducting a war on humanity from the day he replaced Yeltsin. Ever since the Kremlin's cyber warfare department hacked the CRU, he has shown his destabilising influence is global, yet still the Wests capitalists thought it expedient to become dependent on the little Tsar's resources. Putin has had the planet by the balls for years. The only fly in the ointment has been the underperforming military.
Well, if only they'd listened to Trump back in 2018. But the typical anti-Trump media were too busy pushing their leftist 'orange man bad' propaganda.
https://www.reuters.com/article/us-un-assembly-usa-germany-idUSKCN1M527Y
https://www.bbc.com/news/world-europe-50875935
Incidentally, what/who is the CRU?
I assume this is talking points are straight from CNN. Is this the source? Is this more than short selective quotes with editorial "explaining" them?
If you were to "remove" Putin, it's more than likely someone more militant leader would take over. The special operation (not quite a full war) has popular support in Russia. Some their want to escalate it into full war (such as bombing political targets).
I agree, it's a good time. Once you get in your competitors look so weak you get re-elected for as long as your constitution allows for it. Its the contrast to your opposition (domestic and foreign) that are currently weak and subservient to the MSM and US/neo-liberal Empire that makes you really stand out. I think western leadership and opposition used to be stronger.
Do you want a leader who believes in NZ as much as their leaders believe in their own countries? Our leadership currently think a degree from Harvard means more (from her perspective) than a degree from any of our institutions that they have managed for the past 5 years (it might be true but what kind of leader would admit it) and who's foreign policy is whatever the US tells us it should be right down to the talking points.
The working class of all these countries find themselves much closer to the top of the priority list. You forgot Oban and Modi.
They are not just lapping it up people are better off under them. You don't get better election results after getting in for nothing. I don't know too much about the specifics of most these leaders but each one has put their working class above the international order at once in the news. Pre-Putin 90s Russia is a good contrast.
All we have Jacinda and Luxton. I think we could ready to seize onto the next strongman/woman who turns up in our politics, regardless of stability and competence.
I don't know too much about the specifics
Accurate. Sorry, I have too many friends who lived under Duterte and Bolsonaro to take that strongman sentiment seriously.
each one has put their working class above the international order
Duterte really didn't. It's a nice idea, though...
Re Russia, the more apt comparison is with the other former Soviet states that enjoyed greater economic and political liberalisation rather than being ruled by a gangster and oligarchy. As Kasparov pointed out in his book Winter is Coming, predicting what Putin's behaviour.
I have no idea if your friends are electorally representative. There is a constant class battle in every country and it's generally pretty zero sum in the short term. Orban is best example of this he gets back in with a super majority but all we hear in English is rigged everything and it's horrible. Why is Kasparov a definitive source? (did he write his book in Russian?)
Both of these leaders are only in for one term so far and it looks like Bolsonaro can still pull a crowd and he is up against another strong personality for his second. Duterte still appears to be very popular (60% net approval).
I guess there are two list one for strongman and one for strong nationalist who keep getting back for at least 3 terms.
Populist leaders are generally popular...it's right there in the word there. Does not equate to good governance or actually governing for the working class, which are objectively quite different things.
Re Kasparov, merely pointing out that warnings he gave turned out to be pretty accurate, as did his critiques re economic liberalisation of Eastern Europe and the benefits populations experienced, vs. what they have experienced under the looting Putin and oligarchs.
I did not say governing for the working class, just there are far fewer special interest groups and crappy ideology in front of them that take priority. Good governance is politically subjective the electorate chooses their priorities on this.
They elected two presidents and then stuck with Putin for 20+ years and there are many perspectives in this.
Sorry for the delay. To be blunt now I think the only options remaining are military ones of some level or another. I'm loathe to suggest foreign espionage, but an internal coup facilitated by foreign powers? But the devil who replaces him needs to receive the message he didn't get, that there are significant consequences to them personally, and their country for this type of adventurism.
Lol murray. I know that's the CNN talking and not you.
Did the chicken or the egg come first? With "self righteousness" like that people might want to take steps to defend themselves and not trust you in the least. "coup facilitated by foreign powers" got "us" into war so it can get "us" out of it. The US replacing governments it does not like has finally started to catch up with it.
Less of this might help the West - Here Comes More Supply Chain Chaos: US Ban On Xinjiang Imports Starts Today
100%. Silicon Valley firms are here too, paying more than local firms but otherwise less than their costs there.
Healthcare workers too.
Having said that, pay is skyrocketing in these 2 industries and catching up to Australian base rates (although I suspect Australian rates will move upwards creating the gap again). As employers poach from others to fill roles, they then need to lift existing staff to prevent them from leaving down the track. Skilled people are getting at least 10% more in some cases closer to 40%.
Dear people,
We have caused a 10% pa inflationary bomb by our ultra easy monetary policies, eroding your standard of living and pushing day to day expenses through the roof.
Please dont expect a pay rise though, just do the right thing and take another punch in the face.
your kind government
keith,
What I infer from your post is that employees should moderate their pay increase demands for the 'greater good'. You might want to suggest this to your GP when you next need to see him/her.
They are being offered a 3% funding increase and are describing this as insulting with CPI inflation running at more than twice that. What would you say to your GP?
linklater01,
Unfortunately we all have to accept that our living standards are dropping, but the reality is that we will not accept it.
The more wages and salaries rise, the more the RBNZ will have to tighten the screws.
I feel like I am starting to relive the 1970s and through into the 1980s.
Muldoon inherited rather than created the inflation of those times and tried all sorts of tactics to try and control it.
But in the long run there was only one solution. It came post Muldoon and it was not nice.
Personally, I have never been a fan of neo capitalism. I watched the NZ restructuring of the late 1980s from afar and I think NZ did it very badly, with some long term unfortunate consequences. I think Australia did it somewhat better, but they were also handed a somewhat better pack of cards.
This time it is going to be tough for NZ.
KeithW
Beanie'
I don't think there is such a ratio.
But a starting estimate would be for first round effects (possibly delayed by quite some months) equal to the non tradables component of the CPI. And that is 60%, so in the case of your 3% it would be 1.8 %.
But that is just the first round, with the 1.8% leading to another round of wage claims.
However, if inflation is above that of trading partners then in time it will show up in the exchange rate and then flow directly into the tradables sector. And then there is another wages claim...
Wage increases in themselves do not lead to enhanced productivity and they may well lead to reduced investment by business, with the investment that does occur often being in non productive areas - we know plenty about that in NZ!
An unfortunate consequence wage increases at this time is that it will put more pressure on the RBNZ to rein in inflation using high interest rates as the tool and this causes a drop in employment. I belong to the 'camp' that hates to see high unemployment. The more salaries and wages increase right now then the more we will be screaming in a year to 18 months time about unemployment.
Two years ago I was a very lonely voice concerned about the coming inflation (which I already saw at that time, i.e. June 2020 as a consequence of hugely excessive quantitative easing). In the coming months I am likely to be a lonely voice worrying about unemployment, which may still be nit visible, but with causative factors in place.
KeithW
.
It's a wicked feedback loop. There would be no need for income increases if other parts of our economy, like housing affordability, hadn't been allowed to get out of control.
So, of course, wages and salaries need to go up, and a lot.
Given that people need these increases because all costs are now getting out of control, at least to the point that many individual households cannot sustain themselves, they are failing in their individual/family responsibilities if they don't find ways to increase their income.
We are at a tipping point where they have a duty to look after their own needs first, and to hell with anyone else, and come what may. Because if the economy is going to hell in a handbasket, then as long as they have looked after their own, that is about the best they can do.
There is a reason for the saying, 'Nice guys finish last.'
And no one in authority will make any changes until they feel the pain.
And of course as business owners we pay the price of Govt incompetence paying staff more so they can pay the bills imposed by others and now operating at a loss
The tired mantra that Govt services were run down and are now being restored is frankly rubbish - there has been a serious above inflation rate of increase in tax take but services are now worse overall than five years ago - the waste is significant and easy to identify
How true, layoffs have just started and will get worse ..interesting video from USA
Lot of talks about short staff but if recession is persistant , it will not be long before we witness a domino effect.
Our spend is probably too low. Yesterday I read, but couldn’t bother replying that our spend is similar to Australia, which is wrong. But at the same time, same or higher spend doesn’t mean better services. In both education and healthcare, across both National and Labour Governments, we are spending more over time, but getting less. So, I’m not too fussed whether Luxon or Ardern cuts, maintains, or increases spend. The $4 billion questions what are we spending on and how do we measure success? I can tell you that in hospitals paper pushers are increasing and frontline healthcare workers are declining.
We keep hearing that Middlemore is in dire straights, but no party seem to have any plan to fix it. Auckland's population has increased massively over the last 20 years, particularly South Auckland, isn't it time for another hospital? Or at least another building or something. If Labour have increased health care spending it is hard to see where it has gone.
I never understood our obsession with following the NHS down the pencil pusher growth plan in health care. If anyone thinks that the new health care model is going to fix any of the underlying issues, then just consider that the upper echelons of DHB management who have helped take health care to where it is today, are now being given another chance to stuff up a centralised model.
After refusing to commit to not privatising water and sewer infrastructure, I'd be surprised if National would commit to not privatising health. Especially if they're wont to buy into healthcare companies (who receive government funding) after their time in power.
If National ran a campaign on investing in NZ and doing it better than Labour I would probably vote for them. But instead they are doing their usual tax cuts which means less investment, and the tax cuts are mainly going to the better off (good for me but probably not for society) and the property investors. At this stage I would prefer the party that is at least trying to fix our problems compared to the one that will just make them worse.
Boomers, property speculators and mum and dad investors hogging all the housing and pumping up prices beyond what many young people can afford, forcing them into wage slavery for landlords? That's assuming that they are similar to the young guns from my industry that are heading overseas.
Recently I am feeling a bit torn between principles versus appreciating more money. Part of me thinks just take the money with National and tax cuts. After all, Labour haven’t shown me anything to suggest they can plan and build infrastructure (including healthcare) competently. So why go there? Why just throw money (tax) away?
raising income tax thresholds is long overdue and if done in the right way could benefit low and middle income earners significantly l.
I don't buy the whole wasteful thing. Sure some money will be being wasted, but I bet the vast majority of money spent in health goes to actual stuff like supplies, buildings, doctors, nurses, medicines, IT, support, cleaning, etc.
Its the typical right wing theory that they can come in and give tax cuts by getting rid of wasteful spending. But while the waste might seem like a lot of money to you or I, in terms of government spending there isn't a very big percentage that can be cut without a side effect. Very few people are twiddling their thumbs...
Wastefulness is one thing. Lack of delivery is another. Unitec housing, light rail, kiwi build…
If I know Labour don’t really achieve things, and in some cases make things worse, why not put myself first and get a tax cut and a bit more cash in pocket?
My point here is I would love to vote for a party that builds lots of housing, builds transformational public transport, pushes the boat out in terms of climate change and ramps up healthcare. But Labour don’t, and apparently can’t, so on that basis might as well vote for personal gain.
having said all that, I think Labour will adjust the income tax rate threshold in the budget next year
I think criticising Labour for not delivering is fair game. However comparing them to National and implying, National would be better is rubbish. Sure National wouldn't have failed to deliver because they wouldn't even have tried.
In transport they chewed up the whole budget on motorway projects like Transmission gulley and resisted any investment in solutions that will actually help us sort out the transport mess we're in
Because what looks like voting for a personal gain comes back and bites you in the arse in the long term.
The housing market is a prime example of where this mentality of looking after number one has led to the whole system imploding.
From what I can see, National's pitch is more of this, look after yourselves and she'll be right. By all means don't vote for Labour on performance but at least vote for a party that is commited to trying to change the system to fix things rather than just give up.
Amusing. Just how long do you think it takes to build thousands of homes and light rail? From planning, land requisitioning/purchase, project design, infrastructure design AND development, build/development, during a booming economy? And now calculate that duration during an intense, long, labour and supply chain disruption? Let's not forget in that entire process you'll encounter god awful amounts of NIMBY, corporate, council and legislative delays/roadblocks etc
Me thinks you have no clue regarding the short, medium and long term requirements of investment in national infrastructure(which includes housing), and only want to see short term benefits in your pocket, while ignoring the impacts for the future of your family, friends and country on the whole. OR you are already a conservative voter looking to sway others with a penchant for short term thinking.
The are wasteful - increased spending = same or less outcomes for that increased money = waste.
Are they more wasteful? Hard to know, I have not seen research on that.
On the point of raising tax thresholds, this will change very little. The overwhelming majority of tax is already paid by those high earners, in 2011 (the last time the question was asked) 70.7% of net tax was paid by 9.7% of the population (paid over $150k).
The downside is they also want to give freeloading speculators a tax break, leaving productive working Kiwis to bear most of the load again. Absolute bludger mentality.
Re wasteful, it's seems to be more a "feelings" than "facts" talking point, as demonstrated by the fact no one points to specific areas of waste when putting the talking point forth. I'd assume everyone is for cutting demonstrable areas of waste, so why not just point them out?
Well, maybe another six years of falling further behind will help. In the meantime we can enjoy some light tax cuts and kick the can down the road for the kids to pick up. So long as one can afford the soaring increases to private medical insurance costs in one's old age, that are likely to occur as the public system is underfunded and allowed to decline during that period.
Jimbo,
I listened to Luxon being interviewed on National radio this morning and decided there and then that I could not vote National however much i now dislike this government. He just kept regurgitating the same tired mantra to every question. It's quite depressing.
Great article about that interview. https://thestandard.org.nz/luxon-has-been-susied-on-national-radio/
Suzie Ferguson does push him hard, and usually gets an unplanned remark out of him. For the first time today he sounded terse, but as I've said before the guy has nothing interesting or insightful to say. There is absolutely nothing that National offers that would make me vote for them.
Labour has a lot of weaknesses, but also has some strong individuals (Hipkins will eventually be a DPM/Deputy Leader) and I'd prefer that they get at least 3 more years to keep working. Kiri Allan - as long as her health stays strong - will develop into a star. Ayesha Verrall when she speaks from a position of knowledge imbibes some confidence. Little should move on - just every action and utterance seems combative. Those days are gone.
Susie on morning report screwed up the interview by not allowing a simple conversation. Luxon did quite well in face of a wall of repeated questions.
His point, which he stuck to and managed to convey despite her, was that we have vast amounts of money thrown without result. And that needs to stop. It's what you do with it that matters.
So why not be honest and say that you will cut health spending, and specify "the wasteful areas" that will get the cuts. Because it sounded like a return to how National ran down health services.
To be fair he did say one area was to cancel the amalgamation of DHBs.
Great, because public sector restructures are so efficient. Having been through one pretty much every year I worked in public sector I can say that all they do is give HR something to do and push people who can't be arsed to sit around for 6 months for the new structure to bed in to leave
Really...I found it quite informative.
https://thestandard.org.nz/luxon-has-been-susied-on-national-radio/
This is an excellent article regarding that interview.
https://thestandard.org.nz/luxon-has-been-susied-on-national-radio/
Covid has definitively pulled back the covers on the dire neglect of upkeep NZ’s public health services. Read recently Southland Times how Clark & King went against all advice and built a hospital down there that was already of inadequate capacity when it finally opened. In Christchurch the bed capacity was scaled back drastically for the new wing just completed. As long as can remember every government has been playing catch up but of course with a population being moved up to over 5 mill, they have surely progressively got further and further behind. Priority must be given to addressing this. Ask the public what they would prefer. Sound and accessible health services or $ billions spent on a railway to an airport, or a pie in the sky airport in Central Otago, and then go and find some more unnecessaries to cancel.
"Ask the public what they would prefer. Sound and accessible health services or $ billions spent on a railway to an airport, or a pie in the sky airport in Central Otago" - the difference being that spending on infrastructure like rail is is a one off that you have for hundreds of years, investing in health just increases the recurring yearly spend. It shouldn't be an 'or', they really need to do both, Auckland definitely needs better public transport as the roads are clogged. This is not a time for tax cuts.
People need to eat. If we are to fight inflation without pay rises then something needs to give. Tax cuts help but means less public spending.
An example of the elite spending unwisely and taking more than citizens can afford is a unelected Tauranga council who have hiked rates by revaluing housed at the peak, upped everyones rates as a result and are now putting hundreds of millions into pet projects like a $300m library and proposed $200m stadium.
Whilst nz needs a lot of stuff they need to reprioritise and build what we and future generations can actually afford. It may not be feasible to have the best library, health service or train line to the city.. but perhaps we can spend more wisely and have an 'ok' version of both, reduce our housing costs, reduce tax, reduce crime, optimise the existing helath service administration with smaller cheaper tweaks and make sure kids can eat and everyone has a roof.
The current government has driven their costs sky high based on current taxes with a ton projects that are out of nz league. Luxon is right to rescale and reprioritise and rebuild business.
The new MP for tauranga wants to bring tech businesses to the town and remove the unelected council .. much more aspirational than a $500m spend on new buildings the citizens cant afford. When he has the productive export businesses, proper employment, less crime, roads that work and related stable and increased tax income.. then and only then maybe we can look to build some sensible stuff and bigger projects.
Current lot have no financial or strategic nous at all. Just living for todays votes and screw the people and long term future.
Plenty of people in NZ have crap loads of money, the average property investor made 300k per property in the last 2 years alone, and probably paid no tax on it (and definitely wont under National). Yet those people will get the most out of the tax cuts, the people that can't afford food will only get one threshold change worth.
I would like a nice library and stadium, and I earn enough to help pay for it. Without those types of investments cities stagnate and the wealthy / young move out. I doubt the likes of Melbourne would be in better financial shape had they never built stadiums, libraries, galleries, etc. If you are a ratepayer in Tauranga you are probably in the top 1% of the richest people in the world!
Yet those people will get the most out of the tax cuts, the people that can't afford food will only get one threshold change worth.
Number of threshold changes aside, it's also the magnitude in dollar terms of the changes that's the other key issue. Consider the first $50k earned is what everyone needs to survive with. Proposed tax cuts result in the first $50k seeing the lowest dollar amounts gained, with people like Luxon receiving 40% (or $20k) of the amount required to live back on in his pocket.
Agree, building a city that is attractive to people to go an live in requires spending money on things that people appreciate. I don't understand how supposedly successful business people who then move into politics don't get this. If they were running a hotel and they decided to cut everything bar the essentials (shared bedrooms, communal bathrooms, shittiest decor and furniture, crap customer service) they would likely fail to attract customers. If you're going to run a city like a business you need to invest in things that will keep people happy and productive, not just the 'essentials'.
There are also strong health links to good transport investment. The Lancet has recently run a series on Urban Planning and Transport and the effects on health. Good transport planning is good health investment. Spoiler: more roads and car-centric planning it ain't.
That's strange, even if he just said nominally he wouldn't cut spending with inflation so high he could just hold it steady but cut in real terms. In terms of OECD we're mid-table so our spending isn't excessive.
Like all countries with aging societies we do need to exercise restraint.
In Australia, their central banks has been out explicitly warning of the consequences of excessive pay hikes. Anything over +3.5% is a problem for them they say and have warned regular pay rises of 4% to 5% risks entrenching higher inflation and bringing tougher monetary policy measures.
Incessant, ineffective central bank jawboning. Fed fails to control interest rate floors.
Even the 3-month bill is at and below RRP. Three month bill! There are supposed to be rate hikes galore, and this thing is less than IOER and intermittently less than RRP. These are supposed to be Fed-controlled floors. Fed does not control. Collateral is control. Link
Interesting that NZ has tripled the minimum wage in only 25 years while interest rates have tracked down consistently. Now the interest rates are running out of string and inflation is ripping. Almost like the last 2 decades of "prosperity" was completely based on the credit impulse instead of actually generating wealth or product.
Lowe and Orr should be fired. They have failed to keep inflation in target bands and have no means to do so in the near future
A lack of consequences for ceos and reserve bank leaders isnt helping society .. they should lead by example and fall on their sword and the next leader would be aware of whats needed.
In Australia, their central banks has been out explicitly warning of the consequences of excessive pay hikes.
It will be interesting to see how this 'elephant in the room' plays out in NZ over the next year or so. This may be the biggest reason of the many that we can all think of, as to why the Labour Party won't get re-elected next year.
BREAKING NEWS.
Govt. release a new policy that will increase household income by at least a third.
Govt. has now made polyamory legal, in fact, has made it compulsory. As the spokesperson said, 'the more income earners we can get into a household the better the statistics will look. And people might have more fun as well.'
The next policy they are considering is child labour laws since so many children are not attending school, they might as well be employed doing something useful.
I think we will find these kids are employed by the Govts. "Job creation unit."
After all, it creates much-needed jobs for Glaziers, carpenters, and insurance assessors, and the stock has to be replaced.
Some people naively think that the Broken Window Fallacy is a fallacy. https://en.wikipedia.org/wiki/Parable_of_the_broken_window
Chris Hipkins : " There's an air of despondency , consumer confidence is well down ... the team of 5 million are doing it tough , your majesty " ...
Jacinda Ardern : " .... ohhh ... hmmm ... I've got it ! .. what will lift their flagging spirits , what will bring the team together in joy and kindness , I'll announce that after Trevor Mallard leaves we'll be giving him a knighthood ... yessss .... that'll be a rich reward , I'm sure they'll agree ... Sir Trevor , nice " ...
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