Interest rates tipped to rise again
Monday 6 September 2004
The Reserve Bank will almost certainly lift interest rates next week, and again in late October, according to most economists.
By The LandlordInflation pressure is building, economic growth robust and resources stretched.
Signs of a slowing housing market, poor business confidence and a higher New Zealand dollar weighed against higher interest rates but, on balance, the Reserve Bank was almost sure to lift the official cash rate to 6.25 per cent next Thursday, ASB Bank said.
Building consent figures out this week show a big fall in July, reversing a rise in June, but continuing a trend down since March. The National Bank business survey, also out this week, shows company leaders even more gloomy about the outlook.
HSBC Bank said the downward trend in building consents would not be big enough to ease the central bank's concerns about labour shortages while businesses were running close to capacity in a strong economy.
New Zealand has seen economic growth rates ahead of the OECD average for the past five years, rising a total of 21 per cent.
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Housing confidence has been dealt a hefty blow by the Covid-19 crisis with house price expectations plummeting to new lows.
Periods of house price decline are rare and "short-lived", says economist Tony Alexander, amid forecasts of a drop of 10%-15% this year.
Tales of strife and problems abound in the commercial property world these days, but the impact of the Covid-19 pandemic has not been as devastating for all commercial players.