No one is saying they will stop ...BNZ's view is that its not going as high as thought before ...There base case is 50 + 25 +25 maybe ....
IMO the terminal rate is the easier part of the puzzle and at this point I don't think its overly important where it stops +/- 50bps... the harder part is how long will rates persist, will it be a plateau or will it be undulating after the peak. The labour market is still incredibly tight so that'll be the bellwether for me. Recent generations of the population, lawmakers, investors and even some of the RBNZ staff don't have a whole lot of experience with battling inflation. The whole expectation has been until lately that a couple rate hikes would fix the job and it'd come right down which has proven incredibly naïve and inconsistent with history. there are many decision makers responsible for fiscal / monetary policy that will declare mission accomplished when CPI hits (say) 5-6% and start bringing out the fiscal stimulus and dropping interest rates which if the labour market is still tight could just see inflation rebound and we have a years upon years of high rates. a whole lot of unknowns. Fed staff are people who are as imperfect as the rest of us and what ought to happen rarely nicely fits with what ought to happen with the benefit of hindsight
IMO the terminal rate is the easier part of the puzzle and at this point I don't think its overly important where it stops +/- 50bps... the harder part is how long will rates persist, will it be a plateau or will it be undulating after the peak. The labour market is still incredibly tight so that'll be the bellwether for me. Recent generations of the population, lawmakers, investors and even some of the RBNZ staff don't have a whole lot of experience with battling inflation. The whole expectation has been until lately that a couple rate hikes would fix the job and it'd come right down which has proven incredibly naïve and inconsistent with history. there are many decision makers responsible for fiscal / monetary policy that will declare mission accomplished when CPI hits (say) 5-6% and start bringing out the fiscal stimulus and dropping interest rates which if the labour market is still tight could just see inflation rebound and we have a years upon years of high rates. a whole lot of unknowns. Fed staff are people who are as imperfect as the rest of us and what ought to happen rarely nicely fits with what ought to happen with the benefit of hindsight
Agree with your thoughts and highlighting the various moving targets ahead ...I agree no one can actually nail it but some do better job to give their advise better credibility ...thats the case with BNZ Research imo ...they also have a base view that inflation will come off fast when middle level recession hits by end of this year ...they dont have much faith in NZ economy holding up thus propping labour market thus inflation ...they seem to think it will melt very fast in front of even 5.25% OCR on hold for 6 months ...now we will see what actually happens by end of year .
BTW labour market reports are lagging indicator of economy while business confidence etc can be considered leading ...
Labour market trouble is a very Politically Unpalatable situation especially when u have a new PM of Labour Party in an election year ...good chance they will try to force RBNZ to falter ...that will be terrible for NZ people as a whole but especially for the have nots ...
Post covid with public sentiment and emotions and responses so based on " Life is short " mentality that its almost impossible to have any control on their wallets even sensible ones which makes me wonder rates need go higher this time till people actually dont have money in wallet to make any choices regarding spending it ...but that will cause terrible hardships and law and order problems to mange ...so politics may decide inflation is lesser evil ...also Inflate your way out of historic debt thought also support that easier way out thinking ...
As I said the other day the outlook for the economy (esp residential building) is bad enough Orr should now stop hiking rates….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.?..but unlikely
Too late in starting to raise rates and he’s still behind the curve
Whatever high inflation is here to stay for some time
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
As I said the other day the outlook for the economy (esp residential building) is bad enough Orr should now stop hiking rates….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.?..but unlikely
Too late in starting to raise rates and he’s still behind the curve
Whatever high inflation is here to stay for some time
I agree. he will go too far.
In my line of work i am already seeing a noticeable drop off in economic activity and anecdotal evidence from conversations with customers is things are slowing down because of high cost of borrowing + all anybody ever talks about is the coming recession so nobody is doing any capital expenditure.
2023 could be tough for some.
all good, need a break, its been 110% for a number of years now
In my line of work i am already seeing a noticeable drop off in economic activity and anecdotal evidence from conversations with customers is things are slowing down because of high cost of borrowing + all anybody ever talks about is the coming recession so nobody is doing any capital expenditure.
2023 could be tough for some.
all good, need a break, its been 110% for a number of years now
Seeing the same from a range of sectors here too ..
and that's before Govt's most recent great Transport Rort & RUC UP hits
to go round and round in price of just about everything you can name
Originally Posted by bull....
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