Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

OCR Rise Maybe Likely

Wednesday 27th April 2005

OCR Rise Maybe More Likely Than Some Commentators Suggest Says Property Institute

The New Zealand Property Institute today suggested that a possible rise in the OCR tomorrow was perhaps more likely than some commentators suggest.

This follows speculation by many economic commentators that the Reserve Bank Governor is very unlikely to raise interest rates tomorrow.

Property Institute CEO, Conor English said today, “We are not so sure that rates won’t rise tomorrow. The Governor has a difficult balancing act to perform. There is not much head room left for the Governor in his fight to ensure that New Zealand remains a low inflation economy.

“Consumer prices rose 0.4 per cent in the March quarter, pushing the annual rate to 2.8 per cent from 2.7 per cent in December. In all, 350 of the 672 items in the CPI rose in price. Statistics New Zealand state that inflation was saved from crossing the 3 per cent target band in the March quarter only by a sharp fall in international air fares of 15.8 per cent. This leaves very little room for error.
“Since then we continue to see increasing construction costs, increased petrol taxes and prices, a fall off in the inflation suppressing dollar but no significant drop in building activity. With the BOP deficit continuing to climb and increased wage demand pressure and government spending, a case could be made for a rate increase.

“In the normal course of business and given this mornings National Bank confidence survey results, the Governor might well wait another quarter before re assessing and raising rates. However, with the certainty of an election this year, and the possibility of an early election, the Governor may be conservative and raise rates now.

“The Australian Reserve Bank Governor raised their cash rate to 5.25 percent on 3 December 2003 and didn’t raise it again until 2 March this year, to 5.50 percent, well after the Australian election.

“If the OCR is raised we expect to see a continued slowing down in property market activity, a re rating of yields and a dampening of credit growth that helps stimulate the property market” Mr English concluded.

ENDS


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Media Mega Merger: StuffMe Hearing Argues Over Moveable Feast

New Zealand's two largest news publishers are appealing against the Commerce Commission's rejection of the proposal to merge their operations. More>>

Elsewhere:


Approval: Northern Corridor Decision Released

The approval gives the green light to construction of the last link of Auckland’s Western Ring Route, providing an alternative route from South Auckland to the North Shore. More>>

ALSO:


Crown Accounts: $4.1 Billion Surplus

The New Zealand Government has achieved its third fiscal surplus in a row with the Crown accounts for the year ended 30 June 2017 showing an OBEGAL surplus of $4.1 billion, $2.2 billion stronger than last year, Finance Minister Steven Joyce says. More>>

ALSO:

Mycoplasma Bovis: One New Property Tests Positive

The newly identified property... was already under a Restricted Place notice under the Biosecurity Act. More>>

Accounting Scandal: Suspension Of Fuji Xerox From All-Of-Government Contract

General Manager of New Zealand Government Procurement John Ivil says, “FXNZ has been formally suspended from the Print Technology and Associated Services (PTAS) contract and terminated from the Office Supplies contract.” More>>