Black Monday

[JohnnyTheHorse]

some say no increase in OCR because the outlook is not good and most people are kind of broke and hungry and many sleeping rough.

It’s sad how this country has got itself into such a state.

Unfortunately central banks have pushed us into this corner over many years. There is no longer a 'good' option, it's a matter of guiding us down the least worse path. The track record of central banks suggests they will not achieve this very well.

[bull....]

probably doesnt matter what the RBNZ does this week , the banks are doing the tightening.
It will be more interesting how much more the banks jack mortgage rates higher after the RBNZ announcement. they will cause the recession not the RBNZ

[Rawz]

some say no increase in OCR because the outlook is not good and most people are kind of broke and hungry and many sleeping rough.

It’s sad how this country has got itself into such a state.

The biggest issue with this country is too much of a % of working peoples pay packet goes towards housing (rent or mortgage). I am very fortunate to have worked myself up the ladder enough to earn 3x the medium nz wage in my early 30s and wonder how on earth some people in real jobs like truck drivers or midwives do it.

Im not calling for a housing collapse. We need higher paying industry in this country. We need to strive to be the silicon valley of the south pacific. Luxon talks about this type of economy. There is hope w69

[Muse]

in a round about way higher fuel prices do some of the work of higher interest rates. one could argue in a heartless sort of way that in aggregate the country would have been better off not slashing the taxes on fuel. obviously that would never fly. but higher interest rates later are equally challenging & give more political cover

[Aaron]

some say no increase in OCR because the outlook is not good and most people are kind of broke and hungry and many sleeping rough.

It’s sad how this country has got itself into such a state.

Who is suggesting that? Property investors? real estate agents?, bankers? Home Owners? Adrian Orr?

I have read inflation is bit like a regressive tax so I doubt any rough sleepers are overly concerned by any increase in the OCR.

[bull....]

Latest Kiwibank household spending data shows that the March quarter spending was 'especially weak'

https://www.interest.co.nz/business/...was-especially

ASB economists say last week's 'big lift' in wholesale interest rates added to the upside pressure on mortgage rates

https://www.interest.co.nz/business/...s-added-upside

just what i was thinking earlier today about banks jacking mtge rates thru the roof will KO the economy when combined with high inflation.

of course the NZX is still in LALA land

[Rawz]

No need to raise rates when consumer spending is falling off a cliff

this from Tony Alexander:

Right at the start of this year the willingness of Kiwis to spend on goods, services, and assets over the coming 3-6 months took a substantial step down. Our latest survey shows that spending willingness remains weak, and this has important implications for monetary policy. It tells us that the weakness in household spending which the Reserve Bank wants in response to higher mortgage rates is already happening. This does not mean the official cash rate won’t be increased through 2022. But it does mean the heights it gets to are likely to be lower than some have recently been thinking solely on the basis of this year’s surge in inflation.

[JohnnyTheHorse]

Not really the banks jacking rates up though is it... it's driven by bond markets which are fairly free functioning. Haven't checked in awhile but I think their NIM's are fairly low at current spreads.

[Muse]

Latest Kiwibank household spending data shows that the March quarter spending was 'especially weak'

https://www.interest.co.nz/business/...was-especially

ASB economists say last week's 'big lift' in wholesale interest rates added to the upside pressure on mortgage rates

https://www.interest.co.nz/business/...s-added-upside

just what i was thinking earlier today about banks jacking mtge rates thru the roof will KO the economy when combined with high inflation.

of course the NZX is still in LALA land

No need to raise rates when consumer spending is falling off a cliff

this from Tony Alexander:

Right at the start of this year the willingness of Kiwis to spend on goods, services, and assets over the coming 3-6 months took a substantial step down. Our latest survey shows that spending willingness remains weak, and this has important implications for monetary policy. It tells us that the weakness in household spending which the Reserve Bank wants in response to higher mortgage rates is already happening. This does not mean the official cash rate won’t be increased through 2022. But it does mean the heights it gets to are likely to be lower than some have recently been thinking solely on the basis of this year’s surge in inflation.

Interesting.

These would give the RBNZ an easy out from doing a 50bps rise.

Might prefer to take the path of least resistance.

Prefer them to raise 50bps tho…with all time low unemployment that is forecast by trading banks to keep declining this and next quarter, things are very tight. Id be more worried about wage inflation spiralling out of control in the future than taking comfort in weak consumer spending.

[Leemsip]

I read a while ago, in easier times, that the bond market/interest rates are like a horse tied to a post, with the "post" being the reserve bank rate. The post will normally keep the horse nearby, but when something spooks the horse it may decide to bolt off and it rips the post out of the ground and runs off.

I think Orr needs to move 0.5 this time, in order to get some credibility with inflation, also need to get the reserve bank rate closer to the market rate so as to re-attach it to the post again. Hey market, we are in control remember, this is what the interest rate should be etc etc.

Feeling pretty doomy about the share market in this environment. NZX doesnt have anything I fancy at anything like a reasonable price, inflation and jacking interest rates is going to hurt consumers, businesses and everyone across the board. Im easing even further out of the market into cash, where Im only loosing 7% per year to inflation......