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

 


Wheeler to leave OCR unchanged as inflation stays benign

Wheeler to leave interest rates unchanged as inflation stays benign for now

Dec. 3 (BusinessDesk) – Reserve Bank governor Graeme Wheeler will probably keep the official cash rate unchanged at a record low this week because there’s little sign that renewed life in the housing market and Christchurch’s rebuild is stoking inflation yet.

Wheeler will leave the OCR unchanged at 2.5 percent on Thursday, according to all 12 economists in a Reuters survey. Looking out over the next 12 months, the median estimate is for him to begin hiking rates in the third quarter of 2013.

Some economists say he has room to cut rates in his first monetary policy statement since taking the bank’s helm. Recent figures have shown an unexpected decline in third-quarter retail sales, the unemployment rate has reached a 13-year high of 7.3 percent and inflation has slowed to a 0.8 percent pace – below the central bank’s target band.

Yet traders are betting on just an 18 percent chance of a cut this week, based on the overnight interest swap curve.

“An environment of weak near-term inflation would ordinarily prompt serious consideration of an OCR cut,” said Nick Tuffley, chief economist at ASB, in his preview of this Thursday’s monetary policy statement. But the rebuild of Christchurch and “increasingly heated state of parts of the housing market” suggests that “the medium-term outlook for inflation is not nearly as benign as the current headline rates.”

Wheeler may be in no rush to move on interest rates with the New Zealand dollar staying stubbornly high and above the Reserve Bank’s forecast track on a trade-weighted basis. The TWI was recently at 73.41 and is set to close out the fourth quarter at a higher average level than the 72 forecast in the central bank’s September MPS, keeping a lid on imported inflation.

He will also be concluding his review with no clear sign that the US Congress will find a way to avoid the fiscal cliff that would start on Jan. 1, stalling the world’s biggest economy. And while there is progress on aid for Greece, the euro region’s woes are wider and will take longer to resolve.

“Global economic sentiment has improved slightly, but the RBNZ will probably refer to the fragility of the situation and the dangers of the US fiscal cliff,” said Dominick Stephens, chief economist at Westpac Banking Corp.

Stephens expects the forecast track for the 90-day bank bills to be broadly unchanged from the September MPS and “the main messages will be similar to previous missives.”

The 90-day bill rate was last at 2.67 percent and has tracked in a range of 2.63 percent to 2.74 percent since the start of June. The September MPS has the 90-day rate averaging 2.7 percent for the next three quarters.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Sky City : Auckland Convention Centre Cost Jumps By A Fifth

SkyCity Entertainment Group, the casino and hotel operator, is in talks with the government on how to fund the increased cost of as much as $130 million to build an international convention centre in downtown Auckland, with further gambling concessions ruled out. The Auckland-based company has increased its estimate to build the centre to between $470 million and $530 million as the construction boom across the country drives up building costs and design changes add to the bill.
More>>

ALSO:

RMTU: Mediation Between Lyttelton Port And Union Fails

The Rail and Maritime Union (RMTU) has opted to continue its overtime ban indefinitely after mediation with the Lyttelton Port of Christchurch (LPC) failed to progress collective bargaining. More>>

Earlier:

Science Policy: Callaghan, NSC Funding Knocked In Submissions

Callaghan Innovation, which was last year allocated a budget of $566 million over four years to dish out research and development grants, and the National Science Challenges attracted criticism in submissions on the government’s draft national statement of science investment, with science funding largely seen as too fragmented. More>>

ALSO:

Scoop Business: Spark, Voda And Telstra To Lay New Trans-Tasman Cable

Spark New Zealand and Vodafone, New Zealand’s two dominant telecommunications providers, in partnership with Australian provider Telstra, will spend US$70 million building a trans-Tasman submarine cable to bolster broadband traffic between the neighbouring countries and the rest of the world. More>>

ALSO:

More:

Statistics: Current Account Deficit Widens

New Zealand's annual current account deficit was $6.1 billion (2.6 percent of GDP) for the year ended September 2014. This compares with a deficit of $5.8 billion (2.5 percent of GDP) for the year ended June 2014. More>>

ALSO:

Still In The Red: NZ Govt Shunts Out Surplus To 2016

The New Zealand government has pushed out its targeted return to surplus for a year as falling dairy prices and a low inflation environment has kept a lid on its rising tax take, but is still dangling a possible tax cut in 2017, the next election year and promising to try and achieve the surplus pledge on which it campaigned for election in September. More>>

ALSO:

Job Insecurity: Time For Jobs That Count In The Meat Industry

“Meat Workers face it all”, says Graham Cooke, Meat Workers Union National Secretary. “Seasonal work, dangerous jobs, casual and zero hours contracts, and increasing pressure on workers to join non-union individual agreements. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news