Friday, July 18, 2008

A dose of disappointment yet to come

As the recession bites, the BNZ is predicting interest rates will not stay the same as most hope, but actually need to rise to stave off recessionary forces.
The fact of the matter is, global money has become as expensive for NZ banks as it's been in many a year,"

"...While all and sundry are looking forward to falling interest rates, we are worried that term retail rates might have to go up - and stay there for a good while to come."

As households look for relief, businesses face increases in rates and they matter a whole heap more. Businesses is where the the rampant bureaucratic growth is yet to be felt. And felt it will be as more hit the wall as we drastically belt-tighten.
It might take a resolution of the global credit crunch, rather than an aggressive campaign of OCR reductions by the RBNZ to materially reduce the cost of raising money on these shores.

"...So as everyone is wondering whether or not the RBNZ will cut 25 basis points or not at next week's OCR review, we note that even a stream of rate cuts could well be just 'whistling in the wind' in relation to having any material effect on retail interest rates - which are, let's face it, what matter the most," Ebert said.

Are you ready for more disappointment in this winter of discontent?

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