ADRIAN ORR our NEW RBNZ GOVERNOR

[Aaron]

Any country that can not create an environment to provide housing for oncoming generations is a failure. In my book this should be any governments primary focus. My advice to anyone who can not get into a home here is head to Ausi. Preferably five years ago !

Bernard Hickey agrees with you. A rather long and depressing article but the conclusion at the bottom is the same as you.

https://thespinoff.co.nz/business/25...ation-was-lost

Personally I am anti-immigration so rather than become one I will use my vote in the next election to fight for a fairer society rather than buggering off. Moaning on this site is about it for now.

[Aaron]

+.50, 2.5 %

It will be interesting to compare to CPI when it comes out later this month. Below average (since inception) OCR with inflation rates not seen since the 1990s.

OCR history

https://www.rbnz.govt.nz/monetary-po...licy-decisions

Interesting not exactly 23 years of lower and lower rates but new lower lows in 2000 and 2008 and 2020. In 2020 they ran out of interest rates to cut so started on unconventional monetary policy (New column for Adrian "other tools"). It appears to be all one way so I wonder if it is sustainable or if it really is just kicking the can down the road. If that is the case a distinct lack of leadership from Adrian regarding sound monetary policy. The Kaitiaki of price stability failing miserably.

At least he can cut the OCR 2.5% in the next crisis.

I wonder how winner69 values property companies when interest rates are negative??

I guess responsible monetary policy would see asset prices much lower which is unacceptable, so as an investor what does continuing reckless monetary policy mean?

Still the same conclusion, buy whatever assets you can without getting into unsustainable amounts of debt, although at negative rates how much debt is unsustainable? and in that environment is it possible to pay too much for asset?

[Aaron]

7.3% inflation. Because of pandemic, supply chain disruption, war in ukraine (oil going up is a big one) but oil demand and consumption will be is as high as ever, so I wonder why oil demand remains so high despite the switch to renewables.

https://www.statista.com/statistics/...nd-since-2006/

Where is the finance coming from to fund all the activity? Is inflation in housing because "materials are going up in price". Why are they going up? Demand? What is driving demand?

Everything and everyone "except" the central banks are being blamed for inflation. Funny that central banks are responsible for keeping inflation in a 1%-3% range. If the current inflation is due to other factors why would you give the RBNZ the responsibility for what would appear to be an impossible task.

Maybe it is Massive failure by RBNZ and heads should roll.

[Aaron]

"National Party deputy leader Nicola Willis said allowing in more immigrants would help stem rising inflation."

https://www.rnz.co.nz/news/business/...st-in-32-years

Maybe stem a rise in builders labour rates, but materials demand would increase as more houses are required. Why do I bother reading this rubbish.

[Aaron]

have to show my ignorance.

What does this mean "anchoring of wholesale short-term interest rates at the Official Cash Rate (OCR)."

https://www.interest.co.nz/bonds/116...interest-rates

So banks and other finance companies can deposit money short term with the RBNZ at 2.35%. I don't understand why NZ govt bonds are needed as collateral. The RBNZ has no real limit of money when it comes to repaying deposits.

Where would banks put short term funds currently and at what rates. It must pull short term rates up otherwise banks would get higher rates elsewhere, although credit risk is greatly reduced with the RBNZ.

Not sure what they are trying to achieve.

[kiora]

NZ borrowers are getting dumped on
TD rates are tied to OCR latest NZRB announcement

https://www.interest.co.nz/saving/te...s-1-to-5-years
https://www.interest.co.nz/borrowing

"However, over the last 15 years, this margin has been steadily increasing

Now it sits around 4% above the OCR".
https://www.stuff.co.nz/business/the...ate-home-loans

Not only have kiwi mortgage borrowers got larger mortgages(double?) over the last 10 years now they are now paying twice the margin.

That's a big fat ...... for banks, lucky banks !

[Panda-NZ-]

That's a big fat ...... for banks, lucky banks !

Australian banks too.

NZ is their cash cow and they are milking it for all its worth.

[iceman]

Here is a guest post on David Farrar's website that I thought I would post here, mainly to ease Aaron's concerns about things all going wrong. As you can see, we are in good hands and can rely on these alumni and high powered professionals to guide us through the rough waters ahead:

JULY 18, 2022 7:00AM BY DAVID FARRAR
Guest Post: The Reserve Bank Board

A guest post by a reader:
“The Minister of Finance, Grant Robertson, has just released one of his most important press releases of the year, perhaps even this term of Government. He has announced the new Board of the Reserve Bank effective 1 July 2022. The statutory remit of the Reserve Bank board is: “overall responsibility for our strategic direction, functions and operations, and ultimate accountability for the delivery of our outcomes.”
One of the most important Board’s in New Zealand and one might expect stacked with the best and brightest economics and financial people in New Zealand, and from our global diaspora. A mix of heavyweight academics at masters, preferably PhD, level in finance and economics with significant research experience in monetary policy or similar. And balanced against that would be business people with heavyweight real world experience in how economies work and how the Reserve Bank can execute its obligations so there’s an environment where businesses can thrive and help create wealth and prosperity for all New Zealanders: people who’ve who have demonstrated an executive ability to understand and drive the economy, not just get appointed to boards.
You be the judge of the four new appointments. Here they are, referencing their Reserve Bank profiles:
• Jeremy Banks: BSc (Hons) in Computer Science from Otago University. Co-founder and CEO of Plink Software, a software company based in Nelson that produces a free te reo learning app, and similar. In 2019 Plink had 4 staff, but I expect its bigger now. A few minor governance roles.
• Professor Rawinia Higgins: Deputy Vice Chancellor Maori at Victoria University with research expertise in Maori language revitalisation, She has a PhD from Otago University, but the subject isn’t disclosed. Based on the disclosed undergraduate qualification and her current role, we can confidently exclude economics or finance.
• Byron Pepper: LLb and Bachelor of Management Studies (Finance) from Waikato University. 22 years with Goldman Sachs in investment banking.
• Hinerangi Raumati-Tu’ua: Masters in Management Studies (university not disclosed) and fellow of Chartered Accountants ANZ. Previous CFO of Tainui Group Holdings and lots of past governance roles in public, Maori and resources sectors.


The continuing members are:
• Prof Neil Quigley: Vice-Chancellor Waikato University. PhD from Toronto University (doesn’t say what in) but has research interests in industrial organisation, money and finance and economic history.
• Susan Patterson: a pharmacist with an MBA from London Business School and lots of Government and mid-level board experience.
• Rodger Finlay: BCA from Otago. An accountant with lots of Government, Maori related and mid-level board experience.

So there you have it, the seven people who the Minister of Finance believes have the collective wisdom and experience to oversee and guide our Reserve Bank. In summary:
• Two accountants who’ve practiced at mid-size domestic entities.
• A software developer running a small business in Nelson.
• Two academics, one with expertise irrelevant to the core role of the Reserve Bank and the other with expertise peripherally relevant.
• One ex-investment banker.
• No-one with a PhD level qualification in a relevant discipline.
• No-one with substantive treasury experience.
• No-one with a senior commercial banking background.
• No-one with senior executive experience (eg CEO or CFO) of a substantial international company, organisation or research entity, or even an NZX10 company like Spark or Fisher & Paykel Healthcare
• At least three with a deep knowledge of Maori custom , knowledge and language.
• An abundance of mid-level and Government governance roles.

Quite frankly, you couldn’t make this up if you tried.
DPF: I would slightly dispute the characterisation of Professor Quigley as only having peripherally relevant expertise as he in fact lectured me in monetary economics at Victoria University. But I agree with the concern expressed by the reader that the board is very light on people with expertise in monetary policy.

[SBQ]

Here is a guest post on David Farrar's website that I thought I would post here, mainly to ease Aaron's concerns about things all going wrong. As you can see, we are in good hands and can rely on these alumni and high powered professionals to guide us through the rough waters ahead:

JULY 18, 2022 7:00AM BY DAVID FARRAR
Guest Post: The Reserve Bank Board

A guest post by a reader:
“The Minister of Finance, Grant Robertson, has just released one of his most important press releases of the year, perhaps even this term of Government. He has announced the new Board of the Reserve Bank effective 1 July 2022. The statutory remit of the Reserve Bank board is: “overall responsibility for our strategic direction, functions and operations, and ultimate accountability for the delivery of our outcomes.”
One of the most important Board’s in New Zealand and one might expect stacked with the best and brightest economics and financial people in New Zealand, and from our global diaspora. A mix of heavyweight academics at masters, preferably PhD, level in finance and economics with significant research experience in monetary policy or similar. And balanced against that would be business people with heavyweight real world experience in how economies work and how the Reserve Bank can execute its obligations so there’s an environment where businesses can thrive and help create wealth and prosperity for all New Zealanders: people who’ve who have demonstrated an executive ability to understand and drive the economy, not just get appointed to boards.
You be the judge of the four new appointments. Here they are, referencing their Reserve Bank profiles:
• Jeremy Banks: BSc (Hons) in Computer Science from Otago University. Co-founder and CEO of Plink Software, a software company based in Nelson that produces a free te reo learning app, and similar. In 2019 Plink had 4 staff, but I expect its bigger now. A few minor governance roles.
• Professor Rawinia Higgins: Deputy Vice Chancellor Maori at Victoria University with research expertise in Maori language revitalisation, She has a PhD from Otago University, but the subject isn’t disclosed. Based on the disclosed undergraduate qualification and her current role, we can confidently exclude economics or finance.
• Byron Pepper: LLb and Bachelor of Management Studies (Finance) from Waikato University. 22 years with Goldman Sachs in investment banking.
• Hinerangi Raumati-Tu’ua: Masters in Management Studies (university not disclosed) and fellow of Chartered Accountants ANZ. Previous CFO of Tainui Group Holdings and lots of past governance roles in public, Maori and resources sectors.


The continuing members are:
• Prof Neil Quigley: Vice-Chancellor Waikato University. PhD from Toronto University (doesn’t say what in) but has research interests in industrial organisation, money and finance and economic history.
• Susan Patterson: a pharmacist with an MBA from London Business School and lots of Government and mid-level board experience.
• Rodger Finlay: BCA from Otago. An accountant with lots of Government, Maori related and mid-level board experience.

So there you have it, the seven people who the Minister of Finance believes have the collective wisdom and experience to oversee and guide our Reserve Bank. In summary:
• Two accountants who’ve practiced at mid-size domestic entities.
• A software developer running a small business in Nelson.
• Two academics, one with expertise irrelevant to the core role of the Reserve Bank and the other with expertise peripherally relevant.
• One ex-investment banker.
• No-one with a PhD level qualification in a relevant discipline.
• No-one with substantive treasury experience.
• No-one with a senior commercial banking background.
• No-one with senior executive experience (eg CEO or CFO) of a substantial international company, organisation or research entity, or even an NZX10 company like Spark or Fisher & Paykel Healthcare
• At least three with a deep knowledge of Maori custom , knowledge and language.
• An abundance of mid-level and Government governance roles.

Quite frankly, you couldn’t make this up if you tried.
DPF: I would slightly dispute the characterisation of Professor Quigley as only having peripherally relevant expertise as he in fact lectured me in monetary economics at Victoria University. But I agree with the concern expressed by the reader that the board is very light on people with expertise in monetary policy.

IMO relevant academic credentials means nothing. Warren Buffets makes the claim time and time again that if you're too smart academically, then you ability to make wise decisions will go against you because there's the emotional aspect that clouds their academic thinking. To put it clearly, he points at all those economists and university profs that are "supposedly knowledgeable in the area of finance and economics" and says, "How many of them are really rich?" - they're not because they get it wrong all the time. If they had any real chance of knowing what happens from time to time in the economy, they would certainly be able to take advantage of the outcome... but they don't. They're more than often.. wrong. Therefore, the person with a wider, broad base, of varying academic backgrounds may have the better idea of what goes on in the economy.

[winner69]

No more OCR cuts just now says my mate Rodney. Rodney got no barrow to push / ulterior motives

Quality analysis, unlike that done by the bank economists and Reserve Bank, points to a dire near-term outlook, questioning the case for more OCR hikes at this stage, says Rodney Dickens

https://www.interest.co.nz/public-po...ints-dire-near