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 LandlordGovernor 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
Proving tenant liability for damage has long been a major worry for landlords but a recent Tenancy Tribunal shows that it can be done.
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.
Vacancy rates in the commercial property sector are set to increase as changing economic conditions dampen demand.
LVR restrictions were never meant to be a permanent feature of New Zealand’s housing market and ANZ economists argue that some further relaxing of them could soon be on the cards.