BNZ Weekly Overview

The key points of this week's publication include the following.

Things have been on the quiet side as far as data releases go over the past week and we've received no information to alter our central view. This is that growth will ease off over the coming year but at a gradual pace with good insulation from non-residential construction, infrastructure spending, easier fiscal policy, low fixed interest rates, good commodity prices (in the short term at least), good wealth built up in some areas, business capital expenditure, and firm trading partner growth. But inflation risks are high suggesting firm interest rates most of next year with fixed rates at risk of a large leap once United States rates rise more next year, and a firm NZ dollar most of 2005 but at risk of a large fall very late in the year if commodity prices fall away sharply – which is possible but will depend substantially on world growth and whether special price-boosting factors ebb away.

The main interesting things learnt over the past week include the following.

- The NZD has risen two cents against the Aussie dollar as the latter has fallen following weak economic data. Cross flows have caused the NZD to move higher also against a still falling greenback.

- Wholesale interest rates have fallen mainly on the back of the higher NZD and reduced prospects for higher interest rates across the Tasman.

- Construction activity remains at high levels with a slow decline in dwelling consents being offset by 40% annual growth in the value of commercial building consents.

The completer Weekly Overview is freely available to all BNZ staff, customers, and the public with a centralised EMAIL ONLY distribution list. If you wish to add, change or delete an email address please reply to this message or email tony.alexander@bnz.co.nz. Sections of the WO may be reproduced by anyone other than mortgage brokers provided the BNZ is noted as the source.

If you fail to receive the WO in a week please go to www.bnz.co.nz and look for it under "About Us" on Friday afternoon. Failed emails will not be resent or requests for such answered given the workload involved.

ENDS

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A subsidiary of the National Australia Bank Group of companies, BNZ is governed locally by a Board of Directors and strives to help New Zealanders be good with money.

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