RBNZ should stop surprising the market: economist

Sunday 14 March 2004

The Reserve Bank surprised the market for a third time running, this time by not only leaving interest rates unchanged but also in its dovish rhetoric which suggests only one further small rate increase, if any, will be necessary.

By The Landlord

Governor Alan Bollard justified the do-nothing stance by noting that domestic inflation is being offset by weak imported inflation and the strong New Zealand dollar and because of tentative signs the economy may be slowing.

The extent of the surprise can be seen in the way wholesale interest rate markets reacted, the 90-day bank bill rate dropping 15 basis points to 5.5% and the June bank bill futures falling nine basis points to the equivalent of 5.6%.

"They’ve been listening from the sound of it. It’s by far the most dovish (statement) you could have expected," says Brendan O’Donovan, chief economist at Westpac Bank. O’Donovan had hoped Bollard would "see sense" and leave rates unchanged.

He notes that the Reserve Bank’s assumptions have factored in a sharp drop in net migration which should take the heat out of the housing market.

Read More - Opens in a new window
Commenting is closed

Property News

Return to market form

There’s been a rallying of the market with the latest REINZ data showing both sales volumes and median house prices noticeably up with the onset of Spring.

House Prices

No stopping Capital price rises

There’s no sign of a slow-down in Wellington’s property prices with Trade Me Property’s latest data showing that asking prices continue to rise solidly.


NZ proptech start-up scores major investor

Auckland-based commercial property disrupter, Jasper, has raised $2.3 million in seed funding following investment from European asset manager M7 Real Estate.


LVR limits slow down investors

LVR speed limits continue to have a "strong effect" on investors, according to CoreLogic, after the latest Reserve Bank data showed a drop in investor borrowing.

Site by PHP Developer