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 Thursday

09:33 AEST, Tuesday 22 July 2014

NZ UPDATE:

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 lead up 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

www.cmcmarkets.com.au


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

What Winter? Temperature Records Set For June 20-22

The days around the winter soltice produced a number of notably warm tempertaures. More>>

Conservation Deal: New Kākāpō Recovery Partnership Welcomed

Conservation Minister Maggie Barry says the new kakapo recovery partnership between DOC and Meridian Energy is great news for efforts to save one of New Zealand’s most beloved birds. More>>

ALSO:

Tech Sector Report: Joyce Warns Asian Tech Investors View NZ As Hobbits And Food

Speaking in Wellington at the launch of a report showcasing the value of the technology sector to the New Zealand economy, Joyce said more had to be done to tell the country's technology stories overseas. More>>

ALSO:

Mediaglommeration: APN Gets OIO Approval For Demerger Plan

APN News & Media has received Overseas Investment Office approval for its plan to split out its NZME unit ahead of a potential merger with rival Fairfax Media's New Zealand operations. More>>

New Paper: Ninety-Day Trial Period Has No Impact On Firms' Hiring

The introduction of a 90-day trial period has had no impact on hiring by New Zealand companies although they are now in widespread use, according to researchers at Motu Economic and Public Policy Research. More>>

ALSO:

Corrections: Serco Exits Equity Stake, Remains As Operator

Serco has sold its equity stake in the company that holds the contract to design, build and run Wiri Prison in South Auckland but continues as sub-contractor to operate the facility. More>>

GDP: NZ Economy Grows Faster-Than-Forecast 0.7%

New Zealand's economy grew at a faster pace than expected in the first quarter of 2016 as construction expanded at the quickest rate in two years. The kiwi dollar jumped after the data was released. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news