think your forgetting you can have no growth but sticky high inflation ie stagflation therefore int rates would not fall and stocks would probably decline more
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Alokdhir, how I see things re OCR
1- I think it’s a case of what Orr should do versus what it looks like he will do
2- Recall Orr was late to start hiking rates. He’s been behind the curve from the beginning and backward looking in decision making.
3- the outlook for the economy (esp residential building) is bad enough Orr should now stop hiking rates.
4- but with a vision fixed on the rear vision mirror Orr will deliver a few more sizeable hikes. Orr will do overdo the hikes. Hence my suggestion that 6% is possible.
5- These decisions will make a recession inevitable (could be avoided as in 3 above)
6- even then it’s going to take 2-3 years to fix the underlying inflation ‘problem’ - esp if Orr gets fixated on his 1%-3% range
7- the market will lead the fall in interest rates, maybe that’s even started which is interesting.
things could change if Govt intervenes ….they’ve got him by shorts and curlies by keeping him on for another term.
Will see ...but word mentioned which is important to note is. " Eventually " ...also u cant have deep recession without labour market rolling over thus u can have inflation if demand collapses ...only if supply gets smashed too ...still longer term " Stagflation " is more difficult to have ... Inflation by definition is more demand then supply ...
I thought RNBZ was the first bank to stop QE and raise rates ...much earlier then FED ...
Also most of the financial stuff including sentiment is decided overseas
Our Govt is the biggest impediment in helping sort NZ economy as they try to give sugar highs to electorate for winning support ...Cost of living payments etc while RBNZ is trying to reduce money in the wallets to reduce demand
Market will and is already signalling that Central Bank's rates are not maintainable ...thus they dont care if OCR is 6 or 7 % ....Banks will not follow thru thus it wont matter at all
Overall I see better environment for well managed companies with good moat ...Economy can sputter but selective companies will do better
RBNZ might have been first …but should have done so earlier
actually the RBNZ only stopped QE in december 2022 when the Funding for lending programme stopped , so they were not the first to stop maybe the last ?
https://www.newshub.co.nz/home/money...eel-eaqub.html
And markets are rejoicing ...will it last ? Not as per many ...but then many sold everything they had in March 2020 thinking they did well ...Did they ?
NZX is at almost 9 months high !!!