ASB joins Westpac in picking Official Cash Rate to remain on hold at 3% until September
ASB economists have joined Westpac in picking the Reserve Bank of New Zealand to keep Official Cash Rate on hold at 3% until September, instead of June, this year.
In a comment piece titled 'Don't hurry, be tardy', ASB chief economist Nick Tuffley said economic growth had now markedly undershot the RBNZ's expectations. With inflation pressures weaker than anticipated, the RBNZ could afford to hold, Tuffley said.
"Moreover, the economy has proved to be less responsive to low interest rates than the RBNZ had anticipated," Tuffley said.
"This latter reflection, in particular, triggered a far more cautious attitude in December to further OCR increases. We expect the RBNZ will want to be much more certain than usual that economic recovery is entrenched before it resumes lifting the OCR," he said.
“Our outlook for the OCR is 25bp increases at the September and December 2011 MPS releases, followed by consecutive increases at each meeting from March 2012 through to July 2012, with the OCR peaking at 4.5%,” Tuffley said.
Figures released by Statistics New Zealand just before Christmas show the economy shrank 0.2% in the September quarter last year, which was below economist expectations of a 0.2% rise. However, the New Zealand Institute of Economic Research this week said it did not think the economy would shrink again in the December quarter.
Today's comments from ASB follow weak electronic card transaction figures for December, which showed the value of total card transactions fell 1.2% from November.
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Treasury 2- to 30-Year Yield Curve Widens to Record on Inflation Prospects
http://www.bloomberg.com/news/2011-01-15/treasury-2-to-30-year-yield-curve-widens-to-record-on-inflation-prospects.html
This is the red flag being waved madly by the market....the same red flag coming out of the UK....and in China....
Now out you go and borrow heaps and heaps of bank credit for a mighty splurge on price bloated property cos you live in NZ and NZ is different to the rest of the world...nothing bad will happen here...not while we have Bollard and his ocr....he can hold back the tide can our Bollard.....doh
Hats off to the person at the Sunday Star responsible for this......
"Business leaders believe the worst is over
BUSINESS DECISION-MAKERS believe New Zealand is not headed for a double-dip recession, a poll commissioned by the Sunday Star-Times shows.
Unemployment: NZ on par with basketcase SpainWith 210 million people out of work worldwide, unemployment has reached its highest "official" level in history."
Piignzs is most appropriate...I new we'd make it to the top one day...you can count on the NZ govts getting you there...now what do we do?
"The council's president Helen Kelly said: "It is basically too easy here to restructure and to lay people off." SST
Words fail me!
" The CTU would like to see a ramping up of state-funded employment schemes and help for targeted groups such as the young, whereas the right believes the market is better left to itself and even greater workforce flexibility is needed."
So there you have it....if Labour get back into power, expect the socialist and marxist pressure on govt to bring greater debt to all but lots of make work schemes...you can have a job made by govt paid for out of taxes and borrowing...
And unless the current govt give up pretending Santa is alive on a flat Earth, you can expect the recession to grind on and on and on...as they continue to protect the bank profits and debase the money....and socialise the losses.
I did...don't want to hog the space...govt should work to provide the structure on which private enterprise can grow.
The best schooling is that which helps youth to adapt and to recognise opportunity, to know how to make the best decisions and avoid the bad ones. You fail if you hand those tasks to the govt.
Labour and the believers are convinced govt knows best.
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