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

 


Strong migration data likely to seal OCR increase

Strong migration data likely to seal OCR increase on Thursday.


By Garry Dean (Sales Trader, CMC Markets New Zealand)

The Kiwi continues to consolidate around 0.8700 in the leadup to Thursday’s Reserve Bank OCR review. While last week’s Q2 CPI number printed just below market expectation, it was largely in line with the Reserve Bank’s June projections at +0.3% for the quarter. A breakdown of the figure does however show non-tradeable inflation running at an annualised rate of 2.7%, which was slightly below the rate expected by the market and the central bank. This won’t be sufficient to cause the RBNZ to pause on Thursday, with a fourth 25pt increase to the OCR meaning they will have delivered around half of the tightening expected by the end of next year. Focus will be on the tone of the Governor’s statement, with some market economists forecasting that an increase on Thursday may be the last for this year.

The June MPS highlighted the central banks concerns around the demand pressures fuelled by rising immigration. We saw yesterday the release of net migration figures for June which showed a surge to 11-year highs, and the annualised number of migrant arrivals topping 100,000 for the first time ever. This is far stronger than expected, and at odds with the central banks forecast of a decline from recent highs. The additional demand pressures resulting from this level of immigration will keep the pressure on Governor Wheeler to keep rates high, a move that will likely keep the Kiwi elevated at the expense of an export community suffering from a slump in commodity prices.

Last week’s 8.9% slide in the fortnightly GlobalDairyTrade auction has taken the total fall since February to a staggering 38%, and suggests Fonterra’s $7.00 opening forecast for the 2015 season is a mile off the mark. A figure closer to $6.00 looks more realistic, and this would result in a decline of $3 bio in dairy sector revenue, wiping up to 1.5% off GDP in the process. At some point this will weigh on the Kiwi, but for the moment the Reserve Bank are forced to be on the front foot to manage the inflation pressures created by the government’s immigration policy. A pause at present would send the wrong signal, and lead to a decline in mortgage rates that would further fuel the Auckland property market.

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Onetai Station: Overseas Investment Office Puts Ceol & Muir On Notice

The Overseas Investment Office (OIO) has issued a formal warning to Ceol & Muir and its owners, Argentinian brothers Rafael and Federico Grozovsky, for failing to provide complete and accurate information when they applied to buy Onetai Station in 2013. More>>

ALSO:

Tomorrow, The UN: Feds President Takes Reins At World Farming Body

Federated Farmers president Dr William Rolleston has been appointed acting president of the World Farmers’ Organisation (WFO) at a meeting in Geneva overnight. More>>

ALSO:

I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>

ALSO:

Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>

Earlier:

Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>

ALSO:

Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news