Bernard Hickey details the key news over the weekend in 90 seconds at 9 am with Bank of New Zealand, including expectations that data due later today (10.45am) is expected to show Consumer Price Index (CPI) inflation of 0.8% in the June quarter and annual inflation of 5.1%. This includes the 2.2% increase because of the October 1 increase in the GST rate.
Economists will watch the figures closely for signs of when the Reserve Bank will next increase the Official Cash Rate. Most economists see a December increase in the OCR and expect it rise by around 2-3% over the next two years as the Reserve Bank removes the stimulus of low interest rates to control inflation within its 1-3% target band. That would push floating mortgage rates up to around 8%.
Meanwhile, Prime Minister John Key has commented on the eve of his trip this week to the United States that he is "very worried" about the US economy and the prospect of a third round of money printing by the US Federal Reserve, which would further drive the US dollar down vs the NZ dollar. See more here in Alex Tarrant's article.
Elsewhere, the European Sovereign Debt crisis will be the focus again this week on international markets. A crisis meeting has been called for Thursday to try to stop the contagion spreading to Italy and Spain from Greece. See more here at The Guardian.
The IMF has warned that Greece's situation is on a knife edge. See more here at BBC.
Over the weekend 8 European banks failed the results of stress tests, however the stress tests did not assume a Greek default. See more here at Bloomberg.
Meanwhile the US sovereign debt crisis rolls on with little sign of an agreement over a debt ceiling increase over the weekend.
An increase must be agreed before August 2 or America will default on its debt, causing financial chaos in global markets. See more here at Bloomberg.
The New Zealand dollar is firm around 84.5 USc in early trade and near an 11 month high vs the Australian dollar as signs of a downturn in the domestic economy across the Tasman have weakened the Aussie dollar. See more here from Dan Bell.
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1 Comments
"However the stress tests did not assume a Greek default"
This accounts for the comment I read on Saturday regarding the stress tests being a joke. Apparently a similar thing happened in '08' and then two months later.......
Perhaps someone who was watching at the time can fill in the gaps.
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