Click here for this morning's video. Bernard Hickey details the key news overnight in 90 seconds at 9am in association with ASB, including news the New Zealand dollar rose through 70 USc overnight and is staying there in morning trade as US stock markets firmed again overnight.
Markets are ignoring comments from RBNZ Governor Alan Bollard about the high dollar and how home buyers will think about the impact on exporters before they suck in more foreign debt to buy more houses. That is naive and is not how homebuyers work, I believe. This is depressing for exporters and another sign of 'deja vu' all over again as we take on foreign debt to invest more in property, pushing up the NZ dollar. Bollard seemed relaxed about these imbalances in his comments alongside his decision to keep the OCR at 2.5%. Bollard also ruled out the use of capital adequacy tools to slow down the economy. He is hoping possible tax reform and households relatively high debt levels will slow them down. I think there's fat chance of that while Bollard keeps the Official Cash Rate at a record low of 2.5% and mortgage rates are around 6%.
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