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 Landlord

Inflation 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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