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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Speaking For The Bees: Greens Call For Neonicotinoid Pesticide Ban

The National Government should ban the use of controversial pesticides called neonicotinoids after evidence has revealed that even at low doses they cause harm to bee populations, the Green Party said today. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news