Here is the latest Official Cash Rate statement from the Reserve Bank

Here is the latest Official Cash Rate statement from the Reserve Bank

The Reserve Bank has cut the OCR to a new record low of 1.75%.

This is the full media statement from RBNZ Governor Graeme Wheeler:

The Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis points to 1.75 percent.

Significant surplus capacity exists across the global economy despite improved economic indicators in some countries. Global inflation remains weak even though commodity prices have come off their lows. Political uncertainty remains heightened and market volatility is elevated.

Weak global conditions and low interest rates relative to New Zealand are keeping upward pressure on the New Zealand dollar exchange rate. The exchange rate remains higher than is sustainable for balanced economic growth and, together with low global inflation, continues to generate negative inflation in the tradables sector. A decline in the exchange rate is needed.

Domestic growth is being supported by strong population growth, construction activity, tourism, and accommodative monetary policy. Recent dairy auctions have been positive, but uncertainty remains around future outcomes. High net immigration is supporting growth in labour supply and limiting wage pressure.

House price inflation remains excessive and is posing concerns for financial stability. Although house price inflation has moderated in Auckland, it is uncertain whether this will be sustained given the continuing imbalance between supply and demand.

Headline inflation continues to be held below the target range by ongoing negative tradables inflation. Annual CPI inflation was weak in the September quarter, in part due to lower fuel prices and cuts in ACC levies. Annual inflation is expected to rise from the December quarter, reflecting the policy stimulus to date, the strength of the domestic economy, and reduced drag from tradables inflation.

Monetary policy will continue to be accommodative. Our current projections and assumptions indicate that policy settings, including today’s easing, will see growth strong enough to have inflation settle near the middle of the target range. Numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly.

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Headline inflation continues to be held below the target range by ongoing negative tradables inflation. Annual CPI inflation was weak in the September quarter, in part due to lower fuel prices and cuts in ACC levies. Annual inflation is expected to rise from the December quarter, reflecting the policy stimulus to date, the strength of the domestic economy, and reduced drag from tradables inflation.

Based upon what evidence? 175bps of OCR cuts to date? Just show me the money.

Nassim Taleb has described it about as well as anyone else, giving these people the disparaging acronym IYI, which aptly registers as Intellectuals Yet Idiots. Read more and more

That Nassim article is a must read... in my view.

Thks stephen..

I read that last night, it was the only thing on zerohedge that stood out.

Mortgage rates must drop - the big banks have no more excuses, swaps have taken a dive overnight, cost of funding offshore is at record lows and they are making approx $4 billion profit between them! Cut your rates you greedy bankers.

Funny that.. just checked my bank and their rates have risen.

Perhaps if we all borrowed overnight, the rates should drop.
The problem is that we don't and the premium on the borrowing rates is directly associated with our penchant for fixing long(er) term.
Someone has to pay for the risk. Unfortunately, not many people understand this.

Mortgages are risky business now. Welcome to the world of business lending at closer to 10%.

Should at least see negotiated floating mortgage rates at around 4.29%

Okay then. Pump up the fixed terms to greater than 5% to compensate the subsidy...If you want to see chaos ensue, the best way to do it would be to have floating rates below fixed in the (nz) personal wealth sector.

Trump Effect ?

Such 'alleged' strong growth. Yet......
So funny. The gig is up folks

Why would anybody in their right mind want to see mortgage rates decrease? Because the housing bubble isn't inflated enough and some more debt would be super fun for everyone?

Those with mortgages would probably be happy to pay less in interest...

At the expense of economic stability and the risk of the value in their house dropping?