Interest Rates

[drelly]

Agreed... higher rates would be like helping a limping man by shooting him in the other leg!

[WGN ex-property manager]

On the other hand...
higher interest rates mean a stronger dollar, which makes petrol cheaper, and makes exported commodities (such as milk) more affordable at home ass the global whole price drops (when converted to NZD).

So if you want cheaper fuel and milk, raise interest rates.

[drelly]

On the other hand...
higher interest rates mean a stronger dollar, which makes petrol cheaper, and makes exported commodities (such as milk) more affordable at home ass the global whole price drops (when converted to NZD).
So if you want cheaper fuel and milk, raise interest rates.

What are we going to buy it with if our dollar is too high to export anything?

[Austrokiwi]

Liberal left Re your post:

Myopia? US and UK exporters? surely NZ has other markets? I read locally that Wales is looking to develop a market in Canada for sheep meat....betcha no one in NZ had even thought of Canada as a useful market. As for high NZ$ well the main problem is a low US dollar and thats going to be around for a lot longer. NZ is going to have to become world focused not US and UK focused

[muppet]

BNZ says risk of out-of-hand inflation



HAMISH RUTHERFORD Last updated 05:00 19/07/2011


Bank of New Zealand economist, Stephen Toplis, who has been leading warnings about inflation for months, says the Reserve Bank has all the evidence it needs to raise interest rates next week.
Statistics New Zealand said yesterday that the consumer price index reached 5.3 per cent in the March year, the fastest increase since 1990.
Stripping out last year's increase in GST, inflation was 3.3 per cent, above the Reserve Bank's 1-3 per cent target band.
While inflation was only 0.2 per cent above economist forecasts, yesterday's figures caused a sharp increase in bets that the Reserve Bank will raise the official cash rate well before December 31.
Based on interest swap rates, the market gave a 70 per cent chance of an official cash rate rise in October, and a 30 per cent chance of an increase at the September meeting.

More at

http://www.stuff.co.nz/business/money/5303932/BNZ-says-risk-of-out-of-hand-inflation

[Bob Kane]

Inflation out of hand?
That's a worry if it's true.
The cure for inflation is to raise the OCR and cause a recession.
What?
We've just come out of a recession, have been treading water for 5 minutes and now we're heading back into another recession?
I hope the Reserve Bank has a more cautious approach than what some commentators are saying in the papers.

[Austrokiwi]

Did NZ come out of the recession? I know thats what the stats say......but I suspect If one knows how those stats were calculated then perhaps comparing to the economic conditions pre Lehmans NZ never came out of recession. IE recession is calculated quarter by quarter...perhaps as time goes by the strong performance of the earlier economic times drop out of the equation and give a false impression of a recovery.

It would be interesting to see if that is indeed the case

[Bob Kane]

In which case raising the OCR now is just crazy talk.

[eri]

if gov wants to raise savings rates

as it has said it needs to do

then it needs to raise the ocr so banks can pay depositors a rate higher than inflation

it is far easier for most pensioners to send money to oz

than you emigrate there

[WGN ex-property manager]

What are we going to buy it with if our dollar is too high to export anything?

We'll buy it with BORROWED money of course.... country should be awash with it once interest rates go up

[drelly]

We'll buy it with BORROWED money of course.... country should be awash with it once interest rates go up

That's it, I'm going to put bunk beds in every room and rent out blankets and pillows!

[cube]

Liberal left Re your post:

Myopia? US and UK exporters? surely NZ has other markets? I read locally that Wales is looking to develop a market in Canada for sheep meat....betcha no one in NZ had even thought of Canada as a useful market. As for high NZ$ well the main problem is a low US dollar and thats going to be around for a lot longer. NZ is going to have to become world focused not US and UK focused

NZ Meat (mainly beef and lamb) exports to Canada were CA$447m in 2010. (http://www.canadainternational.gc.ca....aspx?lang=eng)

Recipes for NZ Lamb are available on http://www.nzlamb.ca/

Don't underestimate the NZ Agricultural Marketing effort.

[speights boy]

Perhaps 60% of respondents are either ambivalent about, or would welcome an interest rate rise.


Kiwis struggling to meet credit payments

*40 per cent of people anticipate that a rise in interest rates will have a negative impact on their finances.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10739689

[WGN ex-property manager]

So 40% of applicants have a mortgage then, no surprise there.

[muppet]

'Time's up' for low floating mortgages
HAMISH RUTHERFORD Last updated 05:00 25/07/2011
20 comments
Homeowners on floating interest rates should quickly look to lock in fixed rates before prices move up in coming months, a leading economist warns.

Tony Alexander, chief economist at the Bank of New Zealand, said that during the past fortnight there had been clear signs that the economy was gathering speed.

Economic growth was rising faster than experts had predicted, and inflation had hit a 21-year high.

This meant interest rates were likely to increase sooner than expected in an effort by the Reserve Bank to stop inflation getting out of control.

"What this means for borrowers is that time has now run out for comfortably sitting floating, planning to fix before fixed rates rise," Mr Alexander said.

"Such rises are probably just around the corner, with some banks' fixed-borrowing costs up 0.3 per cent from just a fortnight ago. If I were a borrower ... planning to fix, then I would see high risk in waiting any longer."

Only a week ago, Mr Alexander said floating rates were likely to offer better value for several months.

More at

http://www.stuff.co.nz/business/money/5333268/Times-up-for-low-floating-mortgages