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

 


Lower rates favoured more than higher by shadow board

Lower rates favoured more than higher by shadow board

Jan 30 (BusinessDesk) – The members of a “shadow board” looking over the shoulder of Reserve Bank of New Zealand governor Graeme Wheeler are more in favour of a cut in the official cash rate than a rise.

Economists widely expect Wheeler to hold the official cash rate at 2.5 percent on Thursday and that is also the official line of the New Zealand Institute of Economic Research’s (NZIER) shadow board.

Ahead of the decision, economists have noted that Wheeler has tough call in weighing a strong property market, fuelled further by the Christchurch rebuild, against a stubbornly weak economy.

The shadow board puts a 56 percent chance on a hold at 2.5 percent, but graphs revealing the thinking of individual members show an easing bias.

Dave Taylor, the chief executive of New Zealand Steel & Tube, gives a cut to 2 percent a 60 percent weight and a cut to 2.25 percent a 40 percent weight, while Business New Zealand chief executive Phil O’Reilly is 50/50 between hold and cut to 2.25 percent .

Victoria University professor Christoph Theonissen is 80 percent in favour of a hold and colleague Viv Hall sits on 85 percent, while independent member Luke Bunt is 95 percent in favour of a hold.

The professional economists are more skewed to a rise, with BNZ chief economist Stephen Toplis assigning a 15 percent chance to a rise to 2.75 percent and 5 percent chance to a rise to 3 percent with a 60 percent weight to hold.

NZIER’s Shamubeel Eaqub sits in the easing camp with only a 5 percent weight to a hold and a range of chances to various levels of cut, the biggest being a 45 percent weighting on an OCR of 1.75 percent.

Cameron Bagrie, chief economist at ANZ National, is evenly divided with a 60 percent weight on hold and 20 percent on either a quarter-point cut or rise.

“The NZIER shadow board says hold the official cash rate at 2.5 percent is the right call,” says Kirdan Lees, head of public good research at NZIER.

The economy has little momentum and unemployment remains high. Inflation is low. But the Auckland property market is hot and there will be pockets on inflation from the Canterbury rebuild.

“Lowering interest rates further has more support that raising rates at this point,” Dr Lees said.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Maritime: Navigation Safety Review Raises Big Issues For The Govt

Shipping Federation: "The reports makes it clear that the ratification of the Maritime Labour convention (MLC) is long overdue. Only when the MLC is ratified will Maritime NZ be able to inspect and enforce the labour conditions on international ships visiting our ports." More>>

ALSO:

100 Years After Einstein Prediction: Gravitational Waves Found

For the first time, scientists have observed ripples in the fabric of spacetime called gravitational waves, arriving at the earth from a cataclysmic event in the distant universe. This confirms a major prediction of Albert Einstein’s 1915 general theory of relativity and opens an unprecedented new window onto the cosmos. More>>

ALSO:

Farming: Alliance Plans To Start Docking Farmer Payments

Alliance Group, New Zealand's second-largest meat cooperative, plans to start withholding some stock payments to its farmers from next week to bolster its balance sheet and force suppliers to meet their share requirements. More>>

ALSO:

Gambling: SkyCity First Half Profit Rises 30%, Helped By High Rollers

SkyCity anticipates the Auckland business will benefit from government gaming concessions which were triggered on Nov. 11 in recognition of SkyCity’s $470 million Convention Centre development. Morrison said the concessions would allow the Auckland business to lift its activity during peak period, noting it had a record revenue week over the Christmas and New Year period. More>>

ALSO:

Money For Light: Kiwi Scientists Secure Preferential Access To Synchrotron

Science and Innovation Minister Steven Joyce today announced a three-year investment of $2.8 million in the Australian Synchrotron, the largest piece of scientific infrastructure in the Southern Hemisphere, to secure preferential access for Kiwi scientists. More>>

Telco Industry Report: Investment Hits $1.7 Bln A Year

Investment in the telecommunications sector is $1.7 billion a year, proportionately one of the highest levels in the OECD, according to a report released today on the status of the New Zealand sector. More>>

ALSO:

PGPs: New Programme Sets Sights On Strong Wool

A new collaboration between The New Zealand Merino Company (NZM) and the Ministry for Primary Industries (MPI), announced today, aims to deliver premiums for New Zealand's strong wool sector... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news