What happened Thursday

Economy / news

A review of things you need to know before you sign off on Thursday; NZ GDP crumbles, more for milk, more milksolids, farmer sentiment rises, NZGB bonds in high demand, wholesale benchmark rates dive, NZD up, & more

14th Dec 23, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).

MORTGAGE/LOAN RATE CHANGES
Bank of Baroda raised its fixed home loan rates today. First Credit Union raised personal loan rates today.

TERM DEPOSIT/SAVINGS RATE CHANGES
Bank of Baroda also raised most of their TD rates out to 2 years.

GDP CRUMBLES
Economic activity fell -0.3% in the September quarter as household spending on durable goods dropped to a record low. Earlier periods were revised lower too, so it turns out both Q4-2022 (-0.6%) and Q1-2023 (-0.2%) were both in fact negative, and using the cheap two-quarter-negative rule, that put us in recession then. Even with our immigration surge, economic activity is shrinking. Unless this slowdown dampens inflation which is still too high, stagflation isn't going to encourage the RBNZ to troim rates now that the jobs mandate has been removed.

MORE FOR MILK
A new agreement will see Nestlé fund an additional payment to farmers who achieve one of the three levels of Fonterra’s The Co-operative Difference framework during the 2023/24 season. Depending on the number of farmers that meet these levels, Fonterra expects the additional payment to farmers to be about 1-2 cents per kilogram of milk solids.

LESS MILK BUT MORE MILK SOLIDS
Meanwhile, the industry report on the previous dairy season (2022/23) reports that milk production remained relatively stable with 20.7 billion litres of milk containing 1.87 billion litres of milksolids processed by dairy companies. This represented a -0.4% decrease in litres produced, but a +0.3% increase in kilograms of milksolids.

FARMER SENTIMENT REBOUNDS
Following its plunge to an historical low in September, farmer confidence has rebounded strongly off the back of improved dairy farmer sentiment. That's according to the Q4 Rabobank Rural Confidence survey. Despite this sizeable uplift, farmer sentiment remains low overall with a majority of primary producers expecting the performance of the broader agricultural economy to worsen over the coming 12 months.

CENSURE
The FMA has censured Go Financial Solutions for failing to comply with several obligations under its financial advice provider licence. Go Financial Solutions is a Christchurch-based agency that provides advice on health, life and business insurance and mortgage lending primarily to the Filipino community, including non-residents on working visas. During a monitoring review earlier this year, the FMA found that Go Financial Solutions had inadequate record keeping in relation to advice given to its clients, failed to gather sufficient information about a client’s circumstances and was unable to demonstrate that recommendations made to clients were suitable, failed to ensure its clients understood the financial advice they received, and failed to exercise care, diligence and skill when providing financial advice to its clients.

BNZ KIWISAVER TO BE BUNDLED INTO FIRSTCAPE
The BNZ KiwiSaver Scheme and Harbour Asset Management are to become part of FirstCape, a new wealth advice and asset management business owned 45% by BNZ's parent National Australia Bank (NAB), 20% by Jarden Wealth, and 35% by Pacific Equity Partners (PEP) !!?!. FirstCape will have 113 advisers, $29 billion of funds under advice and administration and $15 billion of funds under management, including $5 billion of KiwiSaver funds. The transaction proposed to create FirstCape sees NAB and Jarden Wealth receive a cash payment and PEP acquiring its stake, with PEP's investment used to fund the payments to NAB and Jarden. FirstCape's CEO will be Malcolm Jackson, currently CEO of Jarden’s Wealth and Asset Management business. Pending regulatory approvals, the deal is expected to be completed by June 2024. NAB says it won't have a material impact on its cash earnings. BNZ CEO Dan Huggins says the bank's relationship with FirstCape is expected to "significantly enhance BNZ’s ability to meet the wealth management needs of our customers."

HEARTLAND REDUCES ANNUAL PROFIT GUIDANCE
Heartland Group Holdings has downgraded its annual profit guidance. Heartland says it now expects June 2024 year net profit after tax in the range of $93 million to $97 million, excluding any impacts of fair value changes on equity investments held, and the impact of the de-designation of derivatives. Excluding the impact of the (non-cash) post-COVID-19 overlay and Challenger Bank net profit after tax, the range is $108 million to $112 million, reflecting Heartland’s underlying operational performance. The guidance range was previously $116 million to $122 million, excluding any impacts of fair value changes on equity investments held, the impact of the de-designation of derivatives, and any costs related to the acquisition of Australia's Challenger Bank.

WIRE TRANSFER FAILURES
Citibank NZ has copped a formal Reserve Bank warning under the AML/CFT Act over 64,000 international wire transfers from 2017 to 2022. More here.

FRAUD -> JAIL
The Government is still going after wage subsidy fraud cases. Another was sentenced recently. A man who used a doctored driver licence and 24 different identities to defraud the COVID-19 Wage Subsidy and Leave Support schemes has been jailed for more than two years. Casey John Burtt Smith, 29, was sentenced in the Manukau District Court on 4 December 2023 after earlier pleading guilty to two charges of using forged documents and three charges of dishonestly taking or using documents. A list of all these type of cases is here.

STRONG SUPPORT
There was another NZ Government Bond tender (#888) which was expected to perform well, and it did. Investors piled in hoping to get higher yields before they fall (resulting in a capital gain in secondary markets). Almost $1 bln was left unsatisfied for the $500 mln on offer. The May 2039 yeild was 4.45% and down from 4.78% two weeks ago. The April 2033 went for a yield of 4.56% and down from 4.92% three weeks ago. And the May 2051 one went for 4.82% and down from 5.04% two weeks ago.

STRONG JOBS MARKET
Although the Aussie jobless rate rose to 3.9% in November, the number of new jobs rose more than expected and most of them were full-time positions. The number of unemployed increased by +18,800 to 572,000. But the labour force rose +61.500 to 14.3 mln of which +57,000 were full-time. Their participation rate edged up.

GLOBAL RATES DIVE
Wholesale swap rates are probably sharply lower today on global trends. However, the key reaction will come at the close. Our chart below records the final positions. The 90 day bank bill rate is unchanged yet again at 5.63% and still +13 bps above the OCR. The Australian 10 year bond yield is down -17 bps at 4.12%. The China 10 year bond rate is unchanged at 2.67%. And the NZ Government 10 year bond rate is down -24 bps at 4.67%, while the earlier RBNZ fixing was at 4.70% which was down -20 bps today. The UST 10 year yield is now at 3.98% and down -22 bps from yesterday. The UST 2yr is now at 4.72% so that key curve inversion is now out to -52 bps.

EQUITIES UP EXCEPT TOKYO
The NZX50 is up +0.7% in late trade today. The ASX200 is up +1.3% in afternoon trade. Tokyo has opened down -0.4% in their early trade. Hong Kong is up +1.4% at its open, and Shanghai is up +0.2%. Singapore has opened its Thursday session up +0.9%. The S&P500 was up +1.4% on Wall Street in Wednesday trade juiced up after the Fed decision.

OIL UP
The crude oil price is up +US$1.50 from this time yesterday, responding to the lower USD, now at US$70/bbl in the US, and the Brent benchmark is now at US$75/bbl.

GOLD JUMPS
In early Asian trade, gold is now at US$2032/oz and up +US$52/oz from where we were this time yesterday, also responding to the lower USD. Earlier in New York it also closed at US$2027/oz, and earlier still in London at US$1983/oz.

NZD RISES
The Kiwi dollar is now at 62.1 USc and up more than +¾c from this time yesterday. Against the Aussie we are down -½c at 92.7 AUc. Against the euro we are up +30 -20 bps at 57 euro cents. That means the TWI-5 is up at about 71.2.

BITCOIN RISES STRONGLY
The bitcoin price has moved up to US$42,774 and a rise of +4.0% from where we were this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.4%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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80 Comments

by Justa comment | 14th Dec 23, 4:11pm 1702523472

Big falls in the swaps today at the long end following significant data out of NZ and the US today. The chance of a rate cut June/July next year is now 50/50

by Te Kooti | 14th Dec 23, 4:41pm 1702525313

Yes, the only way out of this mess is for house prices to rise so let's go.

by HughJorgan | 14th Dec 23, 4:50pm 1702525830

Huh? I think you forgot your sarcasm tag.

by ChrisOfNoFame | 14th Dec 23, 4:56pm 1702526198

I think they're quoting the NACTF.

Possibly 7-houses Luxon or that Nicola person who thinks a ferry is like a car.

by easymoney | 14th Dec 23, 9:02pm 1702540930

I have a Nissan cefiro for sale if she's interested.

by Pa1nter | 14th Dec 23, 9:08pm 1702541318

An RB engined one, or a rebadged Maxima?

by sit23 | 15th Dec 23, 1:55am 1702558527

She was using a form of literary figure of speech called a metaphor. You should really look up the meaning of this word, as it crops up a bit on this comment section. Let us know if you need any more help with understanding the English language.

by Baywatch | 15th Dec 23, 6:03am 1702573437

It's not the official language yet..

by longjohndrop | 14th Dec 23, 5:04pm 1702526653

June / July?

more like Feb is 50/50.

lower much faster 🍿

by JimboJones | 14th Dec 23, 5:24pm 1702527870

I think banks will be dropping mortgage rates in Jan, especially 2 yrs and over. Not so sure what Orr will do, he seems to thing there is still inflation out there somewhere...

by Justa comment | 14th Dec 23, 5:31pm 1702528287

yes the banks will move first. As we speak the 5 and 10 years swaps are continuing to dive big time in reaction to the FED dot plot and our data today.

by blobbles | 14th Dec 23, 6:05pm 1702530355

They measure inflation by looking a year into the past, then use that figure (instead of just the most recent), which are collected 3-6 months ago (hence up to 18 months old) to make decisions for a year out into the future. I dunno if you could create a stupider system if you tried.

by RossoCorsa | 14th Dec 23, 6:14pm 1702530841

How else would you tackle seasonality?

The annual comparison has a purpose.

by JimboJones | 14th Dec 23, 7:38pm 1702535884

The quarterly figures are seasonally adjusted.

by blobbles | 14th Dec 23, 11:43pm 1702550585

Huh? All inflation figures are seasonally adjusted AFAIK?

by J.C. | 14th Dec 23, 4:26pm 1702524418

51% of international student graduates in Aussie (bachelor’s degree) who stay in the country for three years after graduation are working in Level 4 or 5 jobs.

These jobs are waiting tables, baristas, couriers, and cleaners.

So much for the expensive education. One of our biggest industries.

https://www.macrobusiness.com.au/2023/12/international-graduates-domina…

by Justa comment | 14th Dec 23, 4:31pm 1702524702

Yes too many doing business degrees. A hard reality for many, has been this way for a while.

by Te Kooti | 14th Dec 23, 4:41pm 1702525261

Too many business degrees, I agree, I mean, why would we want to hire people who can read a balance sheet or segment a market or create a cashflow report?

by Justa comment | 14th Dec 23, 5:32pm 1702528363

Supply and demand, they would have learnt that on their course lol

by Pa1nter | 14th Dec 23, 7:18pm 1702534734

Cause someone invented Xero.

by sit23 | 15th Dec 23, 2:04am 1702559047

The exam results show that the foreign full fee paying students can pass exams concerning their degrees. They don't show that these foreign students can actually perform any meaningful work concerning the degrees they attained. The administrators at many universities expressly forbid the academic staff from investigating good exam results from students who are obviously incapable of attaining such results without cheating. Getting money off foreign students is far more important than trying to maintain academic integrity for the universities concerned. I thought everybody knew this already, and it would come as no surprise to find these people working in jobs more attuned to their skills and abilities, rather than attuned to their "hard earned" degrees.

by J.C. | 14th Dec 23, 4:42pm 1702525359

So you think that's a harbinger for our overpriced, low-value education exports?

by Pa1nter | 14th Dec 23, 6:02pm 1702530156

Our internal education isn't faring much better. Tertiary quals through the roof, no commensurate rise in value of the workforce.

by agnostium | 14th Dec 23, 8:41pm 1702539712

The industry is not about education, it is about backdoor visas. Only some courses are even reasonably respected. If you want to judge how good the courses/universities are work out how many foreign students are coming from countries that already have good tertiary education.

by Pa1nter | 14th Dec 23, 8:53pm 1702540411

Maybe visit some of these places. Western education is still deemed preferable over anything domestic, even internally. Sending your kid to an "international school" in country is good, sending them to a school overseas is the pinnacle.

by Jonny.Foe | 14th Dec 23, 4:21pm 1702524086

Four consecutive quarters of negative GDP per capita for only the second time in over 40 years (the other time was 2008). Yeah, we're going down the tubes. Apparently the 129,000 people that have arrived this year didn't bring suitcases full of NZ dollars after all, and reducing Govt spending while restraining bank lending is a recipe for a recession! Whudda thunk it?

The next 3 months are crucial. We need a Govt with a strong understanding of macroeconomics and a willingness to do the things that are evidently needed. Sadly, we have a Govt that is committed to doing the opposite of whatever the evidence tells them - cutting spending into a deepening recession like foolish ideologues. Not that the last lot had much more of a clue mind...

by J.C. | 14th Dec 23, 4:29pm 1702524558

Your interpretation of and understanding of all this (and willingness to share) is so valuable. I'm sure others will agree.

by JimboJones | 14th Dec 23, 5:28pm 1702528087

While I often disagree with JFoe, he does make a lot of good points and has some great info.

We need a Labour government to spend up big during the recessions, and a National government to cut spending during the good times. Unfortunately we have had the opposite for the last 20 years.

by ChrisOfNoFame | 14th Dec 23, 4:52pm 1702525959

There is a huge infrastructure backlog, albeit often overstated in the need to do it all at once.

If government got stuck into redressing that the recession would be short lived.

But not roads.

Maybe something a bit more forward looking that provides economic benefits for years and years to come?

I know - What about improving the Cook's Strait link? A grand idea. ... No. Wait ...

by Jonny.Foe | 14th Dec 23, 5:16pm 1702527408

This caught my eye - Gareth makes a lot of sense: https://www.abc.net.au/news/2023-12-13/it-will-take-years-to-fix-austra…

by KBKIWI | 14th Dec 23, 5:22pm 1702527737

Yup - government spending shoud be increasing if we are actually going through a recession. Cutting government spending is just going to exacerbate the issue.

by Matt_09 | 14th Dec 23, 5:47pm 1702529243

And Labour were too successful in govt spending!! Unfortunately it went on consultants, woke agendas and stupid ideas with nothing productive to show for it . Which is why we’re in the mess we’re in.

by Jonny.Foe | 14th Dec 23, 7:53pm 1702536808

Labour spent money on some truly dumb stuff, but that is not why we are in the mess we're in. The (flush the) chain of events goes something like this:

COVID and the Ukraine conflict hit the global economy and we see an unprecedented drop in economic activity
Central banks respond to it like it's a 'lack of demand' problem, crashing interest rates and sending asset prices through the roof
As economies open back up (giddy on high house prices), an inflation price shock reverberates across the world. Some industries struggle to re-hire the staff they've lost meaning wages start to tick up
Central banks respond slowly to the supply-shock inflation - but then treat it like an excess demand problem (people / Govts spending too much money). Most central banks hike rates to increase the cost of servicing debts
Thankfully, this partly deflates the asset bubbles they caused at step 2
However, wages come under pressure as households try to keep up with the cost of living - exacerbated by higher mortgage costs. Prices are heightened further by companies using the cover of inflation to increase profits.
As the global price schock subsides (mainly due to falling oil prices), higher debt and wage costs take over as the main push on prices.
Countries that stopped the price shock cascading into wider prices (inc wages) do much better and soon have inflation down close to range (Denmark, Spain, Switzerland etc).
The countries that left inflation fighting to the central bank - particularly those with high private debt (Canada, UK, Sweden, NZ, Aus) - see stickier inflation and a descent into recession.
My forecast is that the next step is 12 months of painful recession as the ideologues in the Beehive and their NZ.Idiot advisors struggle to comprehend that they need to increase Govt spending to save jobs and the economy. They will eventually relent when business bankruptcies go through the roof and and high unemployment causes violent protests in disadvantaged areas.

by Let me be Frank | 14th Dec 23, 7:58pm 1702537110

"They will eventually relent when business bankruptcies go through the roof and and high unemployment causes violent protests in disadvantaged areas. "

I am not sure they will....if history is anything to go by. They are however likely to be removed from power, whether by internal conflict or electoral decree.

by Jonny.Foe | 14th Dec 23, 8:00pm 1702537233

I may be being too optimistic (it is Christmas)!

by Tallmantim | 15th Dec 23, 12:52am 1702554720

You don’t seem to be a Labour or National supporter. If the election were held today, who would you have voted for?

by Pa1nter | 14th Dec 23, 8:58pm 1702540717

Central banks respond to it like it's a 'lack of demand' problem, crashing interest rates and sending asset prices through the roof

In fairness they would have felt like the cheap financing was necessary to bridge the ramifications of COVID and virtually turning off entire economies.

We were lucky it wasn't that serious a disease, but we know that in hindsight and the central authorities at the time were front running the end of days. So instead of the debt assisting survival over the rough patch, people spent up like they lost their minds.

by Jonny.Foe | 14th Dec 23, 9:31pm 1702542681

My strong view is that govt deficit spending did what was needed. The monetary stimulus was completely OTT.

by Pa1nter | 14th Dec 23, 9:57pm 1702544274

In hindsight, yes. Although the government saved some jobs by subsidizing wages, and the RBNZ saved some businesses/private individuals by lowering the cost of finance for them. But not forever.

Both of these institutions acted at the same time, at the same threat. Large central institutions struggle making decent long term decisions, making great ones on the fly is a pretty big ask.

by Jonny.Foe | 15th Dec 23, 6:38am 1702575502

Fair point

by Pa1nter | 15th Dec 23, 6:55am 1702576510

I'm not sure whether there's a system that can have an economy do a Dukes of Hazard style fiscal bridge jump over global catastrophes and not have a bad landing.

There may be ways to try and exclude cheap emergency money going into asset inflation. Complicated, by the integration of property mortgages into how people fund businesses/lifestyles.

by Palmtree08 | 14th Dec 23, 5:21pm 1702527688

"didn't bring suitcases full of NZ dollars".

It made the whinners complaining about not enough cheap labour and whinning talkback radio hosts and their listeners happy though. Now the hangover of paying the infrastucture spend and the social cost of unaffordable living. Ximon "10 million" Bridges plans right on track.

by DaveB1978 | 14th Dec 23, 7:01pm 1702533711

Inefficient spending isn’t what we need Orr is telling people to shut their wallets so the government going on a spending spree would be contrary to dealing to inflation. High interest rates isn’t good for business investment in things that boost productivity

by Pa1nter | 14th Dec 23, 7:08pm 1702534136

Surely debt is only accessed by specuvestors to spend on housing?

Next you'll tell me something crazy, like debt is propping up this whole way of life everyones enjoying.

by Jonny.Foe | 14th Dec 23, 7:59pm 1702537189

Tell me, would the following extra Govt spending be inflationary or delationary?

Give local authorities money for infra but only if they freeze local Govt rates for a year
Restructure the electricity gentailer market to reduce energy bills (in any number of ways they have been advised on)
Put solar panels on the roofs of 100,000 houses
Heavily subsidise public transport
Freeze duty on tobacco and alcohol - but ban any advertising of either and don't scrap the smokefree legislation
Dynamically adjust the excise duty on petrol to smooth out price peaks
You get the gist...

by JimboJones | 14th Dec 23, 8:16pm 1702538179

The solar panels would - they would need to employ a lot of people and hence raise labour costs in that industry.

In fact all of them could increase inflation to some extent.

But some good ideas in general. Certainly better than making landlords tax free.

by KH | 14th Dec 23, 8:53pm 1702540413

Huge government overspend of recent years - edit, decades - has not worked out well for us has it.

by Dgm | 14th Dec 23, 4:31pm 1702524684

Lol, gsp falls, yet rates are pushed higher..

by ChrisOfNoFame | 14th Dec 23, 4:53pm 1702526026

Pretty much their last chance. And what the RBNZ would want (rightly or wrongly).

by ChrisOfNoFame | 14th Dec 23, 4:54pm 1702526067

Ah, stagflation!

Not very likely. Certainly not with the immigration surge we've just had, and unemployment creeping up, and with a new government who claims economic prowess above every other political group and will bash workers whenever they poke their heads up.

Employees will find it very hard to convince their employers that a big pay rise is justified (even if it is).

No pay rises = no stagflation.

by Palmtree08 | 14th Dec 23, 5:25pm 1702527907

Thought that was the very definition of stagflation? Fast rising prices + rising unemployment.

by JimboJones | 14th Dec 23, 5:30pm 1702528201

Why would we have fast rising prices with no imported inflation, no labour inflation, and no demand inflation?

by GetFeeling | 14th Dec 23, 7:32pm 1702535567

"In economics, stagflation or recession-inflation is a situation in which the inflation rate is high or increasing, the economic growth rate slows, and unemployment remains steadily high. It presents a dilemma for economic policy, since actions intended to lower inflation may exacerbate unemployment."

Source: https://en.wikipedia.org/wiki/Stagflation

by Let me be Frank | 14th Dec 23, 6:20pm 1702531207

No pay rises = no stagflation.

No....no credit creation, no stagflation.

Whether anyone is game to provide or take on credit is yet to be determined.

by GetFeeling | 14th Dec 23, 7:35pm 1702535728

No. See the definition above.

by Let me be Frank | 14th Dec 23, 8:26pm 1702538808

You cant raise prices when there is no wherewithal to pay them....well you can but your sales will be fewer and fewer.

The wherewithal is provided by an increased supply of 'money', not a decrease.

That way lies deflation....perhaps after a temporary stagflation.

by J.C. | 14th Dec 23, 4:57pm 1702526272

The venerable Ashley Church on The Platform. He mentions that property data sets (like Corelogic) need to use a "logarithm" to estimate the actual market situation.

Wonder if he knows what a logarithm is and if anyone in his organization has explained it to him.

On a positive note, his crystal ball suggests onwards and upwards in the next 18 months for the property ponzi.

https://www.youtube.com/watch?v=GntST4IrF5M

by KH | 14th Dec 23, 8:58pm 1702540681

The venerable Ashley has religious beliefs. Impervious to actual signs. That's his logarithm.

by tomjones_04 | 14th Dec 23, 5:02pm 1702526529

This frustrates me. In a country full of clever, home grown talent... the politicians put the stupid property market before everything else. We should be making things and selling it to the rest of the world.

by Eschaton | 14th Dec 23, 5:18pm 1702527500

Like what? They didn't teach us that at school.

by Pa1nter | 14th Dec 23, 9:01pm 1702540889

It's easy, anything no one else has thought of doing.

Get on it government!

by DaveB1978 | 14th Dec 23, 7:06pm 1702534008

Physical goods are not the answer as we are too far away from major markets. Digital goods should be part of the solution. The NZ super fund should invest to give access to capital without selling out.

by Pa1nter | 14th Dec 23, 9:21pm 1702542068

The reverse side of the tyranny of distance coin for physical goods, is the fact that the competition in the digital realm has an exponentially higher competition base - there's no geographic dependency in order to do it.

We have a few successes there, but there's no inherent advantage for NZ to make us lead there - certainly no where near the same ability to raise capital for it either. Not even Europe can come close to competing with the US in this realm, shown by the global dominance of US tech.

I feel the answer is in between, technological advancements adding value to, or increasing the efficiency of goods our locale is best suited for.

The majority of that though is already addressed by the private sector, the government can't really do a heck of a lot, except try to pick winners (which they'd suck at) and give them some sort of boost.

by Te Kooti | 14th Dec 23, 5:10pm 1702527020

https://www.telegraph.co.uk/business/2023/12/13/white-male-recruits-fin…

No pakeha men in senior roles without CEO sign-off.

The sun really has set on the stale, male and pale.

by J.C. | 14th Dec 23, 5:19pm 1702527552

More Indian men being promoted to C-suite level roles for multinational corporations across Asia because boards see them as more relatable to Asian culture. The days of the high-cost expat package for the white man have been becoming thinner for quite some time.

Some of the women CEOs I have encountered are ruthless. Wouldn't expect them to squirm at the bashing of seal pups.

by Te Kooti | 14th Dec 23, 5:27pm 1702528069

It's a bear market for the white male executive. I'd draw an analogy with oil and white men, kind of necessary but they aren't the future and you can't question it.

by Uninterested | 14th Dec 23, 5:56pm 1702529783

by Pa1nter | 14th Dec 23, 9:23pm 1702542198

Rich white men will continue to lord over the planet for some time yet, but the ones below them aren't going so well.

by kiwikidsnz | 14th Dec 23, 5:52pm 1702529556

“To follow the path that others have laid before you is a reasonable course of action; therefore all progress is made by unreasonable men.”

— Steve Jobs

by AshwinRai1488 | 14th Dec 23, 5:20pm 1702527645

Even with our immigration surge, economic activity is shrinking. Unless this slowdown dampens inflation which is still too high, stagflation isn't going to encourage the RBNZ to trim rates now that the jobs mandate has been removed.

I quite appreciate your honesty David.

However, I think that things need not be this dire. US is at 3% inflation and China is in deflation. This makes 42% of global economy at around 1.8% inflation.

The rest of the world including NZ will very soon see inflation easing. RBNZ might have to cut early and this will reignite the economy. It is hard to make a case for inflation sticking around much longer, particularly when the 2 largest economies aren't inflating.

by HughJorgan | 14th Dec 23, 6:50pm 1702533042

My pick is that the RBNZ is going to sit on a “no change” for quite some time. Orr is going to let the economy tank to avoid the property market getting away again.

by Pa1nter | 14th Dec 23, 6:59pm 1702533596

He couldn't care less about the housing market.

He wants lower inflation, paid for in tears.

by Averageman | 14th Dec 23, 7:36pm 1702535792

He shouldn't care about the housing market. He warned against self injecting cheap debt, several times even. If you didn't listen and chose to believe the vested and tickets clippers, whose fault is that?

Managing inflation is now again the primary focus after it was interfered by the last govt.

Let the 🍿 flow.

by Pa1nter | 14th Dec 23, 9:02pm 1702540964

I've gone through all mine watching some of you guys rail against investors.

by Justa comment | 14th Dec 23, 7:25pm 1702535106

Yes they will sit back and enjoy watching inflation ease, relieved the spiral seems to be under control. The talked about April DTIs will need to be in place first, they will not want to lose the hard won gains. But yes, 2024 OCR cuts are now in the frame for the first time. The spring 2024 housing market could be an interesting test for the DTIs.

by TronMVP | 14th Dec 23, 7:33pm 1702535588

Adrian Orr is under the delusion that he can control interest rates. Maybe the floating rates, but the 2 year rates could be cut quite easily by the banks before the end of this year. Expect to see "special " rates of 6.5%. As one commenter keeps saying, Lower Must Faster.

by longjohndrop | 14th Dec 23, 7:57pm 1702537061

Lower Much Faster 🍿

it has arrived

by Piggy | 14th Dec 23, 7:59pm 1702537151

All this chat about DTIs is nonsense in my view - National (and Act particularly) will not allow it.

by Justa comment | 14th Dec 23, 8:34pm 1702539246

That would be political interference of the Reserve Banks independence.

by Pa1nter | 14th Dec 23, 9:05pm 1702541153

I've heard Bill English in a recent interview say that the Nats know the public are unlikely to tolerate another house price spike without the government having to further regulate it.

I definitely wouldn't rule it out.

Whatever you do guys, avoid addressing supply.