ADRIAN ORR our NEW RBNZ GOVERNOR

[dobby41]

Confirmation from the RBNZ house price increases due to higher immigration and lower interest rates.

https://www.interest.co.nz/property/...een-average-52

Keep building houses by all means but if you are serious about addressing the rise in house prices someone needs to address the drivers. 1/ reduce immigration 2/ increase interest rates

Not that hard really if you have the cajones. Unfortunately time and again Adrian has shown a lack of spine when it comes to doing the right thing. Make the hard calls as well as the easy ones Adrian.

Adrian doesn't control immigration and can't influence it - maybe you are confused as to who can do what.
The Govt has indicated that it wants to reduce immigration but many want more and more.
The previous National Govt used it to prop up our economic growth.
Interest rates may be on the way up (you'll have to wait and see - it is a hard call) but have been very influenced by overseas trends - we may be an island but we aren't isolated in an economic sense.

[Logen Ninefingers]

We are in an inflation feedback loop now.

Interest rates are one way of controlling inflation, simply because the populace and businesses see the lever being pulled & expect inflation to be impacted.

If no lever is pulled, and inflation is known to be rising...
1/ Businesses will raise prices because it is now acceptable - inflation is expected.
2/ Consumers will buy now to beat the price rises, and in doing so will further fuel inflationary pressures.

This is where it becomes a feedback loop and a self-fulfilling prophecy.

Jawboning about 'transitory' will not cut it, higher costs are coming down the pipe and they are not going away.

[Aaron]

Adrian doesn't control immigration and can't influence it - maybe you are confused as to who can do what.

I appreciate Adrian is only in charge of interest rates and currency supply thanks. Probably didn't write that to well.

https://www.rbnz.govt.nz/monetary-po...licy-tools#fn1

Reading that they either need to update their website or they have no plans to raise rates and if anything will be able to take interest rates negative next time asset prices look like falling.

Appreciate your frustration Logen, you are expecting the RBNZ to put a stop to inflation and do the right thing as per their mandate re price stability but inflation is the only way to get rid of the debt.

TeslaGod might be right buy a house. Although he did say not right now so patience might have to be the way to go.
It might seem expensive now but as the trend shows todays prices might look like a bargain a couple of years from now. Inflation will take care of the debt because that is what the central banks need to deal with, the debt problem. Unfortunately debt keeps growing so the moves to restrict lending would make sense as the debt problem was getting worse along with inflating asset prices, but if you restrict lending and let inflation run for a few years their problem will be solved and TeslaGod will be even more insufferable.

Or they could overact and crash everything with an interest rate hike and you will have missed an opportunity of a lifetime by putting all your money into an overpriced house. Who knows.

[TeslaGod]

Inflation is transitory. The OCR will be lowered again in 2023

I hope you all managed to increase your wealth the last 18 months from low interest rates through the share market and property.

Or did you wait on the side line while everyone else got rich .

No matter, so long as you learn your lesson that's just as beneficial.

[Logen Ninefingers]

Inflation is transitory. The OCR will be lowered again in 2023

I hope you all managed to increase your wealth the last 18 months from low interest rates through the share market and property.

Or did you wait on the side line while everyone else got rich .

No matter, so long as you learn your lesson that's just as beneficial.

Inflation is transitory.

No-one with an ounce of common-sense or their ear to the ground would describe this inflation as transitory.

For one, the cost push pressures are real & they are massive.

For two, they are driving a feedback loop where people expect price increases and businesses feel at liberty to pass on the costs to consumers.

You will be proven wrong - for now I guess you can gloat or argue, or do both.

[TeslaGod]

Inflation is transitory.

No-one with an ounce of common-sense or their ear to the ground would describe this inflation as transitory.

For one, the cost push pressures are real & they are massive.

For two, they are driving a feedback loop where people expect price increases and businesses feel at liberty to pass on the costs to consumers.

You will be proven wrong - for now I guess you can gloat or argue, or do both.

I'm trying very hard not to sound arrogant or gloat perhaps it's how you translate my script.

I'm only trying to inform or educate those who are wanting to learn or understand/grow.

If the cost of a loaf of bread increased by 5% in August it doesn't mean it will increase 5% every month for the next year.

It will eventually stabilize (like house prices) ,

Most if not all kiwis income will adjust
(If not you need to move jobs)

This is why inflation is transitory.

[Logen Ninefingers]

So if you get a pay rise, that means inflation. goes away? Lol. It just contributes to the feedback loop. More money chasing the same pool of goods that are increasing in price.

You are talking about a loaf of bread. The is a lot more involved here than a loaf of bread.

[TeslaGod]

So if you get a pay rise, that means inflation. goes away? Lol. It just contributes to the feedback loop. More money chasing the same pool of goods that are increasing in price.

You are talking about a loaf of bread. The is a lot more involved here than a loaf of bread.

The loaf of bread is an example for the wider economy.

Inflation is apart of a healthy economy, it incourages investment into businesses and increases there workers income.

The problem is inflation has been declining for the past 40 years.

[FTG]

Have to say it is mildly entertaining watching you each get yourself stuck in the Inflation/Deflation debate/quagmire. To be honest, I have been guilty of falling into the same trap. Just like when you ask the question to a bunch of economists, who despite having access to exactly the same economic datasets, each opine an entirely different prognosis on what has happened, is happening, and will happen!

It is easy for us all, including the average economist, to lose sight of the fundamental principles governing the intricate "workings" of money and the monetary system as a whole. One of those 1st principles that most folk don't truly understand revolves around INFLATION. So what actually is inflation? 99% of people (including lots of economists) will simply say "it's prices rising". (Therefore DEFLATION must be "prices falling" ).

Well, that answer strictly speaking is not correct. A learned monetarist will tell you that the term inflation originally derived from the word inflate. Hence the term inflation referred to the monetary supply being inflated (like a balloon). Yes granted, a common BUT not guaranteed outcome from that inflated money supply is market prices of services & goods rise (represented in NZ by the CPI - Consumer PRICE Index) Conversely deflation is actually when the total money supply (actually in circulation) contracts; as in there is LESS money chasing the goods & services in the market.

Whether the PRICES of goods and services actually rise following true inflation will be determined by a myriad of inputs, on both the supply & demand sides of the equation. Certainly not JUST how much money is being created & circulating. A case in point is with global population demographics. As the planet's population has grown by billions AND more inhabitants have joined the middle class ranks, the system has needed more money AND of course goods & services. With just that one changing supply & demand dynamic, yes we have seem the prices of goods & services rise, but counterintuitively we have also seen many actually FALL (think advancing technology & hence the associated efficiency & productivity gains).

So, monetary inflation has been around since Adam was a Cowboy, and it is still very much alive & kicking. Especially as politicians instinctively "need" some PRICE inflation to have a chance of keeping their job. As probably most here are aware, monetary inflation has actually accelerated in the last 2+ years. We have certainly seen this flowing through to create "The Everything Bubble" But, whether PRICES of assets, (TeslaGod for example your properties!) services & goods are now in a "transitionary" stage, or further accelerate upwards or actually fall over the next 2 -5 years is still to be seen.

One potentially significant but seldom mentioned & understood indicator is the "Velocity of Money". Globally, money velocity peaked in the mid 90's and has generally continued to trend downwards since, to now be near ALL TIME LOWS. A rather ominous sign IMHO.

[Bjauck]

The loaf of bread is an example for the wider economy.

Inflation is apart of a healthy economy, it incourages investment into businesses and increases there workers income.

The problem is inflation has been declining for the past 40 years.

I presume you are referring to declining consumer price inflation, because asset price and especially real estate price inflation has not been dropping. I would suggest that inflation has not been good for workers in the last 40 years as the declining home ownership rate attests. The nation's assets have ended up being owned by a small percentage of its people?

Edit: Thanks FTG for your post. It is full of juicy information. I will need to read it a few times