Reserve Bank Governor Alan Bollard has left the Official Cash Rate on hold at 3%, arguing a slowing of economic growth and the effects of households and businesses reducing debt allows him to keep the OCR lower for longer.
(Update 1 adds video of Bollard at press conference, ASB economist comment.)
The Reserve Bank forecast the 90 day bill rate would rise to 4.7% by early 2013, which is around 150 basis points less than the peak it had forecast as recently as June.
The bank also saw a further 2% fall in house prices in the year to March 2011 with the risk for a more substantial decline.
Like the Treasury, the Reserve Bank saw the earthquake in Canterbury detracting from growth in the September quarter but adding to it in the year after that.
Bollard said the growth outlook had moderated and the inflation outlook was well controlled despite an expected spike in the headline inflation rate in coming months.
“Over the past year, despite high and rising export commodity prices, increased employment and economic recovery more generally, household and corporate spending has risen only modesty,” the RBNZ said in its September quarter Monetary Policy Statement (MPS).
“As a result, credit growth has been very weak, with household and agricultural credit increasing only slightly, and business credit actually contracting. While borrowers have been quite cautious through this time, lenders have also been quite risk averse,” it said.
“A key implication of this caution is that the interest rates faced by households and firms have been providing less support than history would suggest. Furthermore, elevated bank funding costs have caused these interest rates to be quite high relative to the OCR,” it said.
“This all suggest that the current level of the OCR is providing much less support than has historically been the case.”
“The bank continues to expect to gradually remove monetary policy stimulus over the projection. However, the pace and extent of further OCR increases is likely to be much more moderate than was projected in the June quarter. The 90 day interest rate is projected to increase by about 150 basis points over the coming two and a half years. Given that the OCR is only moved in discrete multiples of 25 basis points, several on-hold decisions are implied by this forecast.”
Here is the full statement below from the Reserve Bank.
The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 3.0%.
Reserve Bank Governor Alan Bollard said: “While the global and domestic economies continue to recover, the outlook has weakened since our June statement. We consider it appropriate at this point to keep the OCR on hold. “The earthquake that struck Canterbury on 4 September has significantly disrupted economic activity and is likely to continue to do so for some time yet. Many homes and businesses have been damaged, as have significant parts of Canterbury’s public infrastructure. Eventual reconstruction and repairs will require considerable resources over the next year or two, particularly in the construction sector. If, in the aftermath of the earthquake, the prices of some goods and services increase temporarily, monetary policy would remain focused on the medium term trend in inflation. The Policy Targets Agreement explicitly instructs the bank to look through temporary price increases generated by a natural disaster.”
“Looking more generally at the domestic economy, the household sector remains cautious, with consumer spending soft, house sales falling and house prices remaining flat. With continued soft demand for credit, this suggests household spending will not increase to the extent previously projected. “The pace of expansion in the global economy appears to have slowed in recent months with forward indicators of US growth, in particular, deteriorating noticeably. Nevertheless, continued strong growth in Australia and China will support demand for New Zealand exports, reinforcing the continued contribution of high export commodity prices.”
“Overall, despite the weakened outlook, we still expect that growth will progressively absorb current surplus capacity over the next few years. In addition, changes to indirect taxes and earthquake impacts will cause headline inflation to spike higher over the coming year. Previous experience of GST increases, the fact that annual CPI inflation has been near 2% for the past year and a half, and the subdued state of domestic demand suggest this inflation spike will have little impact on medium-term inflation expectations.”
“Over time, it is likely that further removal of monetary policy support will be required. The pace and extent of further OCR increases is likely to be more moderate than was projected in the June statement.”
ASB economist Jane Turner said the Reserve Bank had issued a very dovish statement:
This MPS has brought a huge shift in the RBNZ’s view of the recovery – even before the impact of the earthquake starts getting taken into account. Particularly, it has reinforced that the OCR is unlikely to climb substantially during the tightening cycle. Two key reassessments have brought this on: the extent of recovery in household demand, and; (in effect) the neutral level of the OCR. On both fronts the RBNZ has surprised with the extent to which it has cut back its outlook – even ourselves, who have had the lowest forecast for the eventual OCR peak.
Our view of a 4.5% OCR peak is effectively where the RBNZ’s 90-day outlook implies the OCR will eventually end up – and we don’t think this pre-earthquake view from the RBNZ will have changed. We have been pointing out since the start of the year that that changed funding costs have meant that the neutral cash rate is (for the next couple of years at least) substantially lower than it used to be, and that the eventual peak will be very low. We continue to see this low peak as entirely reasonable.
However, we do expect inflation will be a little stronger than the RBNZ currently assesses, and that the path to a 4.5% OCR will be a little faster than the 2 and a half year time frame the RBNZ’s forecasts currently imply. Nevertheless, it remains likely that the RBNZ will be on hold for the rest of the year, at least while the economic impact of the earthquake remains uncertain. The urgency to act has gone. There is the risk that when the tightening cycle recommences that it will be a stop-start path. Market pricing already has a fairly gradual pace priced in, though implied pricing for the eventual OCR peak will still look low compared to the RBNZ’s outlook. Right now the RBNZ is certainly not encouraging any closing of that gap at the moment, but longer term the market’s implied OCR peak will likely prove to be too low.
Market reaction
Swap rates dropped on the announcement, with short-term rates dropping around 9 basis points. The curve has steepened, due to smaller drops for longer-term rates. The NZD has also dipped. Prior to the announcement, the NZD was trading around USD 0.73, and in the subsequent minutes dipped to around 0.726. The NZD has also dropped noticeably against the AUD. Prior to the meeting the cross rate was around 0.78, and in the wake of the announcement has dropped to 0.774.
In the short-term, it is likely that the NZD remains weak, as New Zealand interest rate markets adjust lower. But we wouldn’t get too bearish on the NZD, given the environment of low volatility and the relative yield pick-up still offered by New Zealand term-rates. There is certainly more downside in the NZD/AUD on a medium-term basis (to below 0.77) because of the clear guidance the RBNZ has delivered on the interest rate outlook, compared to the upside risks to the Reserve Bank of Australia (RBA) interest rate outlook.
72 Comments
He should have cut it. He made a mistake in June and he should be correcting it:
http://www.realeconomy.co.nz/110-cut_the_ocr.aspx
http://www.realeconomy.co.nz/102-rbnz_weighs_against_export_rec.aspx
http://www.realeconomy.co.nz/100-will_the_rbnz_halt_englishs_re.aspx
http://www.realeconomy.co.nz/90-ocr_hike_reckless.aspx
It was indeed "reckless" and it only compounds the mistake not to correct it. I wonder why not?
http://www.realeconomy.co.nz/96-survey_pride_or_prudence.aspx
“Pride should not win out over prudence. The RBNZ should signal lower for longer on interest rates and indicate the favoured route will be to use macroprudential efforts to press back against any inflation concerns for the foreseeable future.”
Cheers, Les.
Simple,
In June looking 6~12 months forward doesnt look as dire as it does now. Reckless, no...given just how volitile and un-stable the world's economy is....I think it was a fair call.
You sound like a stuck record on the "macroprudential" bandwagon...you have yet to convince me you even understand what you are asking for.
Inflation isnt he issue IMHO, collapsing economies and deflation is....In the US at the very least inflation is now in serious dis-inflation mode and could be into deflation before or not much after year end....(depends on how effective the Fed's QE2 will be, about zilch I suspect)....
regards
Complicated,
Best to KISS - Keep it simple stupid - you must have heard that one?
Reckless or fair call - see the survey data and others interpretations eg. BERL, NZIER - it'd be different if it was just the likes of NZMEA and PEC, who think RB got it wrong. Besides RB should be better than being wrong footed by a 3-month change to a 6/12-month view to make these kinds of decisions. Not everyone agreed they had it right, as you can see, and some were 'proper' economists.
The useful thing about macroprudential tools/approaches is they provide more robust control of money supply volumes and this is something the OCR on it's own fails to do. Eg, asset specific LVRs, eg. on dairy say, that RB wanted to introduce, but has seen Fed Farmers thwart that effort. Such tools allow more precision in addressing macro issues, which the blunt OCR cannot. As for the prudential aspect, all good, but it's the money flow control aspect that I (and others, eg.IMF) think could be useful to us. I believe the last RB annual statement of intent (I think it's called) said RB will be investigating such things in the next year, which is good news in my opinion.
If inflation isn't the issue, then why would you agree tightening was a fair call? Deflation and collapsing economies didn't just happen in the last three months, did they?
Fed and QEII - any suggestions about how they could do it differently and be more effective?
Cheers, Les.
KISS would be stick to the OCR only...
Reckless would be do something on purpose and gambling...like say running a red light...
Making a judgement call on highly volitile and difficult to read data, no where near reckless IMHO....sure I probably wouldnt have raised the rate myself....but the RBNZ is there to stabilize things and not rush from one extreme to another on a whim....now that would be reckless.
For every real economist Im sure there are lots of other real economists......with opposing views....the bansk were all overly optimistic 3 and 6months, indeed I think I recall some saying 50 basis points maybe....
oh and to read NZIER you have to be a member....
Inflation & Fair call....it was by no means certain we would move to a depression scenario 3 or 6 months ago. It was and now is the most likely outcome for the next 6 months.....by Im not an economist, Im just reading others who are and looking at the quality of the work behind their prediction...
The Fed & QEII.........the Fed was and is part of the problem.....political appointees doing what their Pollie masters wanted IMHO....this is the result.
QEII, If they had sorted the main banks and written down the debt quite possibly the world's financial system would have frozen, you cant undo over-night 30 years of abuse by the Fed and the Pollies.......easily......
At some point I think fear will take over, right now the gamblers in the market are in there gambling because the margins are big and they think the Govn(s) will bail them....so its greed....
Ive bailed from shares etc....I dont think QEII will work and I dont think they can stop the train wreck. QEI was too small, it was their only chance and they buggered it.....Then consider its likely the GOP will win control of the house and probably the Senate in the USA in November, they are radical loons....they will freeze Obama and even the Govn....they will also bring in protectionism and with, God help us Palin in 2012, bet a few bombs will fall....
Remember the American way of life is non-negiotiable....the only alternative is strive and conflict....
regards
Also I think what is becoming apparent is the scale of de-leveraging going on in NZ consumers, 3 and 6 months ago it Im pretty sure consumer spending looked more resilient...
What I do see moving forward is a high degree of volitility that will continue to make what looks like sound judgements 3 and 6 months ago about the future look shall we say un-wise....forcasting was hard work as it was, this period is now significantly worse.
regards
So why not cut then? Adapt to the circumstances. See my comment 16 Sep 10, 3:34pm, below.
Sure, KISS would be just use OCR, but it's not enough, hence the renewed interest in tools/approaches that can supplement it, eg. CFR, with modifications, variations. It wouldn't even need a change to the RBA, I'm told.
If RB were prepared to use such tools, sorry, were allowed by Fed Farmers to use such tools, our neutral could drop and with it NZD value and volatility, which would assist a wider export led recovery, and also farmers not soley farming for capital gain.
So why cut then?....because we havnt seen the melt down yet....if we are in for a hairy 6 weeks to the next RB....I think that will be a hold myself again....December, hmm by December i think its looking like we will be clearly into deflation, I think its going to be shocking by then myself just how desperate the Fed and BofJ and EU will be...Irelend, Greece....ikky....I dont think xmas will be fun for a lot of ppl.
Im not a pro Les.....im reading the likes of Steve Keen and lots of ppl, I think they have it sussed as much as anyone.....they seem to have their eyes open, with no blinkers and their maths and thoughts lined up...
Why cut the OCR? will it make any difference if he does? will you be exporting into a disaster? probably not. The NZ is strong because the others are weak and may get a lot stronger...I dont think Bollard can or indeed should go in hvy footed...
Also what we dont want to see is ppl investing in property again becasue the rates are so low....its worthwhile for them to take the risk...
have very low rates helped the USA? doesnt look like it....
Oh and Roger Kerr, where is he with the new normal is 5% when the RB says a max of 4.7% and a long way off.......
regards
But The Man, NZ's economy is slowly grinding backwards. Real incomes aren't rising, unlike the CoL. The good news is that I have no more property debt so I'm not worried, and also that by the time you finish school and leave home property prices will be so low that even you will be able to afford a house on your MacDonald's wage.
So what he is really saying is that we have price inflation (specifically cost-push inflation), which he cannot control.. but he is trying to downplay that point...
At the same time we have monetary deflation (as households repay debt rather than businesses and households borrowing more)... a deflationary spiral will lead ultimately to increased unemployment.
This dangerous combination is a central banks worst nightmare is it not? Will Bollard find himself in the very same shoes as the Fed is right now? I think so.
Without intervention at some point the pain on remaining tax payers becomes so great that it leads to social unrest. So can we expect to see the govt step up its borrowing at some point? Maybe soon a $1 billion a month will not be enough.
Well many questions, and the show is just getting started. {grabs popcorn}.
Para 1....Yes, push inflation....but its been looking that way for 12+months, yes MP cant control that, best it can do is kill something else or everything...its not a scaple....Ive posted before I think MP is a dead duck....its not a past peak oil tool.....now we need tools to reduce the volitlity and not excessive but stable outlooks.
Para 2....The US clearly has dis-inflation at present which is looking like deflation, its looked that way for 3~6months.....I cant see NZ not following, 6~18 months later. The US stimlus packages brought spending forward they are now ending and the spending for the next 12~24months was spent in the last 12months...so what do they do? bring the future 5 years forward? yeah right....
Para 3. Yes CBs are I think buggered by their own blinkers, I hope somone starts sacking them, though the Pollies need to go as well...Also they should also have fixed the Merchant banks, 2 years ago by nationalising them, they didnt....now they reap the rewards. NZRB is not in the same position as the Fed IMHO, generally I think he's done a good job given impossible circumstances....but big foreign events will steer us.....
Para 4. Pain on tax payers.....they feel nothing yet, really they dont, if they have kept their jobs its close to business as normal if subdued spending. The pain and un-rest comes from the un-employed and when it looks long term and they see that look out. Im pretty much betting our NZ un-employment will go past 10%....the US's 15% and maybe double what we see to day ie 16% for NZ and 20% for the US....and thats the US's fiddled figure....their real un-employment is 16% now....so 25%+ seems quite possible. If that happens then it will hurt tax payers as like I said I expect a more progressive tax system, in fact highly progressive tax system in most of the developed world....I hate to use the term but socialism will be in ascendance....So the top rate of 30% will become 40% even 50%....more? possibly...and the so called [super]-rich will have no where to run to, every developed country will be increasing taxes (in-direct and direct) and cutting services there is no choice.
And before the right whingers jump down my throat, this isnt what I want its what I think will happen....not that I dont think we shouldnt have a more progressive tax system anyway....not just to the degree I expect.
regards
I agree Gerald but not that they were "forced", they had the room to do it and they did wich is good for the reasons you mention, just look at Japan don't you think that they would be on top of the world if they had a tool like that, not to mention the USA, Europe. The banker has the best tool going forward, Australian RBA has it nicely too... talking about high rates nobody is talking about yesterday's Consummer Confidence reading in Australia... did anybody see it -5%... W.O.W.
Nope....Im there as well....I agree with Matt S...its looking very rough....
Forget growth there isnt the oil....growth will stop...
Lots of ppl have been saying just this for some years.....its like oh maybe you just pulled your head out of the sand....oh cr*p here comes the truck.
regards
Wrong dukey boy. We aren't hitting the panic button, but we sure as hell don't expect the good times to roll.
Only folk with their pants down use words like 'panic button'.
Are you one of them?
Some of us saw it coming and got our houses in order.
No panic at all, y'all
Bernard, I am not so sure about no more rate hikes for a long time. The exchange rate with Australia at or near 1.30 New Zealand gets a lot of manufacture demand and commodity revenues soar , I think that by December the picture will be quit diferent. We will see. I think that Mr Bollard is sailing the rough sea in great shape.
Why would Australia be so much better? From what I know, home affordability is even worse over there and although the weather's nice (if you enjoy being roasted), I'd rather keep my meetings with crocs, lethal spiders and the likes to a minimum. I just don't understand this fascination with Australia. Why do you think that they are immune to what happens in the rest of the developed world and will end up better off if things get as bad as some say?
Oh please... About time Kiwis got more self-confidence and got over their inferiority complex with Australia. (Why? "because you're worth it" lol). Seriously, Kiwis have no reason to keep putting themselves down, it's unjustified. Plus doing so is counter-productive...
Bernard..? no article yet on the Yens intervention and what it signals...?
How the hell can I enjoy any sort of a gloat when you supply me nothing to gloat on...huh?
I woke this morning....the talking head (Corrin) didn't want to talk about it.....the radio didn't want to talk about it.....Bolly doesn't want to talk about it.......
What the hell is going on.
For what it's worth I don't want to see Mike Jones talk about it........it'll have more spin than a silkworm ass.
Anything thats too contentious..is brushed aside its best not to worry the Proles too much as its information overload time....For what its worth...No more Yen to stuff the money away in...So Gold hits another high.The Janitor at Wall street has had to double the amount of toilet paper in the Loos.
I agree. The duration of my debt ( $1.3m over 9 rentals ) is less than 10 months. The next rollover of one of my mortgages is one of my largest ones at $186,000 and I am looking to roll onto a 2Yr or 30mths at 6.50%/6.60% This would be only a small premium over a floating rate of 6.20% and would push the weighted average duration of my debt beyond 1Yr ( works out at 385 days from current 279 days if fixed for 2 years. Next rollover is just a few weeks later and will look to do the same.
Stop your imperialist moaning Christ-ov and start turning Japanese.
here's some saki-porn for the troops to get the sticky riceball rolling??
After months of speculation, the Bank of Japan has spent as much as US$20 billion to weaken the yen and to ward off the threat of slowing the country’s exports.
Estimates for the BOJ’s intervention in the currency market range from US$1.2 billion, cited by the Nikkei newspaper, to US$20 billion forecast by BNP Paribas SA. Hidetoshi Yanagihara, a senior currency trader at Mizuho Financial Group Inc in New York, estimated intervention of US$10 billion, or about 853 billion yen.
The Bank of Japan acts for the Ministry of Finance in intervention. It was the first time since 2004 that Japan has sold yen.
Finance Minister Yoshihiko Noda said Japan intervened in the currency market because of the impact of the yen’s gains on the economy. He said Japan would continue to take action, and had acted without foreign assistance.
“It is highly unlikely” the intervention will work over time, Pacific Investment Management Co’s Mohamed A El-Erian said in a radio interview.
“Bloomberg Surveillance” with Tom Keene. The intervention today was successful because it had the element of surprise, Pimco’s chief executive officer said.
As a result, the greenback posted its largest daily gain against the yen in nearly two years. By mid-morning in New York, the US currency traded at 85.63 yen.
The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.23% to 81.41.
"If you're going to trade this, I would not try to lean against the BoJ right now. This has caught a lot of investors on the back foot, and I expect the BoJ will have the upper hand for the next few days," Mike Moran, senior strategist at Standard Chartered in New York, told Reuters.
US Treasury 10-year notes declined on speculation Japan would buy shorter-term US government debt, as part of its intervention strategy to help support its economy by weakening the yen.
The yield on the 10-year note rose 5 basis points to 2.73% at 2.18pm in New York, according to BGCantor Market Data.
So where are all these new yen going to end up? The Yen created yesterday, so far, into their deflationary domestic economy at zero will look for a yielding home. To avoid another round of asset price price inflation we have to (a) get our nominal interest rates down~to at least try to encourange domestic production and (b) immedialtely bring in a raft of taxation legislation that ensures that any carry fund leakage into this country is used it's benefit. Not another round of swapsies with property.
Well if it all heads our way..That would be very strange. As an economy going nowhere but with long term deposits at 6%plus...Our dollar would keep rising... then no one could afford our goods and when our dollar reaches stagering heights. We could ask JK to put on his money laundering hat..and sell every darned Kiwi dollar he could.Then when the Kiwi collapses a few hours later..He could then buy twice the dollars back again...this would promt an imediate rise from its manipulated lows and we'd end up with twice as much cash as we started with.Better than mowing each others lawns?
Exactly my point! Get 6% ( unless we slash the benchmark OCR) and get an exchange rate gain, as well! Yen will flood in here~and Australia( as it did a few years ago) looking for both yeild and rate gain. The only outlet, as with last time, will be property speculation, because we don't have an industry base to fund. Lower the OCR and change the tax laws, quick! Otherwise it won't be just the Chinese hot money we have to contend with, but the Japanese and then, the American.
Surprised...? surprised.....are you taking the sample Micheal....? Bolly doesn't look at all well and I v'e seen enough interviews with him to know a healthy Bolly and a walking lip serving gees I'm fresh out of ideas here Bolly.
It's good that your looking for the light....nothing wrong with that....but as the old boy scout mantra goes...
Hope for the best and prepare for the worst.......
The Reserve Bank seems to have recognised the weaknesses in our trading partners that should have prevented any Official Cash Rate (OCR) hikes until this point, but has not found the resolve to reverse earlier hikes. The two hikes have and will continue to reduce growth in the export economy say the New Zealand Manufacturers and Exporters Association (NZMEA).
NZMEA Chief Executive John Walley says, “There has been talk of further quantitative easing in the United States, and the Bank of Japan has just intervened in currency markets to bring down the value of the Yen. We will see our growth prospects continue to suffer while these comparisons are ignored.”
“Debt has become the dominant force in the economy with businesses and households choosing to retire debt rather than invest or consume. This means lower inflationary pressure over the medium term.”
“This begs the question: why has monetary policy stimulus been removed? The tradeable sector has never been an inflation driver, and with the domestic pressure gone there is no reason to inflict damage on the tradeable sector. As we have said previously, pride should not get in the way of a prudent decision.”
“The message is simple; we will not see new export investment leading the recovery with the dollar at 72US cents.”
http://www.realeconomy.co.nz/111-ocr_damage_continues.aspx
Pride eh, it's a killer - and RBNZ's pride is killing tradeables.
Cheers, Les.
Is this what happens when an economy that was built on easy cheap credit and property speculation for capital gain...comes to an abrupt halt!
Who would have known it would come to this. And what is the debt loading....oh just 180 billion...err isn't that about $36000 for every single peasant in Noddy...babies too!
No worries right The Duke....all paid off by xmas and back to the splurge....not.
"Who would have known it would come to this..."
Anyone who wasn't retarded. Imagine having tons of debt, no savings, and much the same income (CoL/inflation-adjusted) as you did years ago. Frightening. Thank the sky monkeys that we're not in that boat. Well, I'm not.
Les - you're living in a Keynesian lala land. The US and Europe will be forced into devaluing their currencies further, as any half-witted economist should be able to work out. The US couldn't care less if the NZD/USD cross hits 0.99 - in fact, they quietly welcome it. So, you're beggar-thy-neighbour approach would have us with a 0.5% OCR (i.e. negative real interest rates) and a significant drop in the value of all NZD denominated assets and a "low" currency. You're obviously not a saver, or else the intentional destruction of the NZD would cause you some concern. Also, who do you think can devalue towards zero the fastest - Bollard or Bernanke and co? Your intent in helping exporters is laudable, but lower interest rates and a lower dollar are a hiding to nowhere. Your strategy is the same one as the US and Europe is pursuing...do you seriously think that NZ will be able to "beat" them at this game? Wishful thinking.
Ludwig, is that an Austrian name?
Anyway, what is, "Keynesian lala land" " about """ about using money volume control approaches/tools to tighten monetary conditions so that OCR, rate differentials, NZD value and vol. can be reduced, all while maintaining purchasing power, in particular for the benefit of savers? We don't have to print, we just have to get less vanilla. Besides if we did print we could ... nope, I'm not going to give it away, I asked Steven (above) how he thought the FED could be more effective with QEII, maybe you can help? The first step is understanding what went wrong with QEI, any ideas?
Cheers, Les.
I am going to have a think about what you have had to say......it looks plausible... but just does not ring true.....the prisoner strategy is not a currency based one but a trade war positioning which will take precedent over currency strategy.
In that the US would continue pressure for a rise in the Yuan reducing the need for devaluation of their own unit.
It is not in US interests overall to have a weak currency while it is the reserve currency and wishes to remain so.
In the short term QE will have that effect but that is not their long game position.
As to caring if we are .99 to the buck I don't think they'd know we were alive if not for Little Brother over the ditch.
Lloyd - is it M1A1, A1M1 or L1A1? (Bang!)
Anyway, nope, we don't need to fix, we should remain floating, but not have our vanilla boxer shorts down round our ankles to get drilled, bored, reamed and counter-sunk, by every Tom, Dick and Harry in the 'casino economy' who are chasing carry and risk-yield, leading to shorter-wavelength momemtum speculation, that all results in NZD overvaluation and volatility, that screws real-economy trading. We drop i.rates and use money volume controls to control inflation. (See my waffling above.)
Cheers, Les.
Nope, we are not, "saying that exporters need an historically low OCR to survive today"
Have a look at the NZMEA website and associated blogs and see what is being said. Read again some of the comments made by John, Selwyn and myself on this site.
However, what's required to sustain the wider real economy is a currency value/volatility that better reflects trade of real goods and services, not interest-differential driven currency specualtion. If that means an historically low OCR, nevermind, if we are using other means to maintain the purchasing power of savings.
Cheers, Les.
On Wednesday I was talking to a vendor of a North Shore Auckland property who said he had finally sold his property after having had it on the market for around six months or so. This house would be in what is considered a good part of the North Shore. I asked him whether it had been a good experience. He said it had been tough and what he had got for it in the end was well below his initial expectations price wise however he was pleased to have sold as he thinks the market is going to get weaker. I then asked what he thought about the Auckland market in general as many commentators on this site are saying it is currently going better than the rest of the country. His response was a word I could not and would not use on this site. I will leave that to your imagination.
Seem to be a totally different market for the upper end. where I work in Parnell - most of the listing had SOLD sign on it. I attended an auction one lunchtime and even the leaky ones got sold. But I do know few people who are trying to sell in the 500K market and they are struggling!
it's not looking good in the States this morning with the Fedex job numbers tanking !
Apparently,FedEx earnings fell short of analysts’ expectations, leading Wall Street investors to wonder whether their recent optimism about the economic recovery was premature.
FedEx, considered an economic bellwether, also said it would eliminate 1,700 jobs.
On the economic front, there were more mixed signals. The number of Americans seeking unemployment benefits unexpectedly fell last week, while manufacturing in the Philadelphia area contracted in September.
Again, the " new normal" is no-one, but no-one, really knows what time it is ?!
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