The RBNZ pulled its gloves off and delivered the well expected interest rate cut, bringing the OCR down to its lowest level ever, 1.75%. The banks have passed none of this on to clients, in fact negotiated rates today were a lot worse than months ago prior to the previous cut. The main reason has been around funding pressure from abroad – Since Trump’s victory in the States the cost of longer term debt instruments have increased. Could this be temporary?
Effectively this recent rate cut has had the effect of a more stable rate at the banks than a downward move. Here are couple positives to take from the recent RBNZ release.
Migration
New Zealand is an awesome place to live and more people are starting to catch on. Registrations on the Immigration NZ website was up more than 20 times normal following the result of the US election, BREXIT was not so dissimilar. 14,000 plus nett migrants per quarter is well up on the last peak of around 8,000 seen around 2002 and 2003.
Dairy Prices
After what has been a fairly tough 2016 the end of the year has bought about some comfort. The dairy price index reflects somewhat of a rebound. Some might feel that the substance of the rebound is temporary however if sustained it could be a good 2017 for the economy. It could mean some upward pressure on the interest rates.
Whats ahead for rates?
Few things are for certain in this world, however there is some comfort in a globe with central bankers ready to drop the cost of borrowing money. Many eyes will be on the US Federal Reserve and their rate movement or lack off in December. There is a feeling in the market that the bias for future US rates is upward due to Trump’s promised spending binge.
For a typical couple approaching there 50s, getting into an investment property could mean another $800,000 in retirement(in this example). That is considering a property
RBNZ with good news
Effectively this recent rate cut has had the effect of a more stable rate at the banks than a downward move. Here are couple positives to take from the recent RBNZ release.
Migration
New Zealand is an awesome place to live and more people are starting to catch on. Registrations on the Immigration NZ website was up more than 20 times normal following the result of the US election, BREXIT was not so dissimilar. 14,000 plus nett migrants per quarter is well up on the last peak of around 8,000 seen around 2002 and 2003.
Dairy Prices
After what has been a fairly tough 2016 the end of the year has bought about some comfort. The dairy price index reflects somewhat of a rebound. Some might feel that the substance of the rebound is temporary however if sustained it could be a good 2017 for the economy. It could mean some upward pressure on the interest rates.
Whats ahead for rates?
Few things are for certain in this world, however there is some comfort in a globe with central bankers ready to drop the cost of borrowing money. Many eyes will be on the US Federal Reserve and their rate movement or lack off in December. There is a feeling in the market that the bias for future US rates is upward due to Trump’s promised spending binge.
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