In this show we will look at some of the recent data relating to the New Zealand economy, which is sitting in a high interest rate, recessionary condition, as the Reserve Bank of New Zealand wrangles inflation towards its targets. We saw a significant rise in people leaving the country, with New Zealand Citizens voting with their feet!
So, we will look at the latest on property prices, retail spending and the latest inflation and migration updates. Overall, things remain very tough, though inflation while remaining sticky, is easing slowly.
So, standing back, clearly the New Zealand economy is not out of the woods yet, but the Reserve Bank of New Zealand’s approach of lifting rates higher than Australia does appear to be pushing inflation in the right direction. The uptick in exits from New Zealand suggests perhaps that some are deciding to jump ship, because households are clearly feeing the pressures. And recent policy changes will likely continue to reduce net overseas migration, with potentially significant impacts on the jobs market, and demand for property.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The Reserve Bank of New Zealand left the Official Cash Rate at 5.5% on Wednesday, saying that Restrictive monetary policy has reduced capacity pressures in the New Zealand economy and lowered consumer price inflation. Their statement on Monetary Policy had a decidedly hawkish tone, signalling rate cuts will be delayed until around August 2025, which is implying that markets are pricing cuts about 12 months too soon. This is important as we will see, later.
And folks, 5.5% is significantly higher than the weaker 4.35% in Australia, suggesting that we could be facing higher for longer too.
The report said annual consumer price inflation is expected to return to within the Committee’s 1 to 3 percent target range by the end of 2024. That said, in an economic note, ASB says they continue to expect the RBNZ will remain on hold until early 2025, but the risks are tilted to a later start. The RBNZ’s forecasts have inflation holding up higher for longer, with inflation not back to 2% until 2026 (though it is a rounding error from that mark over the second half of 2025).
The RBNZ did discuss the possibility of lifting the OCR at this meeting but didn’t see the need given inflation is still expected to be comfortably back in the target band over the “medium term” i.e. the next couple of years. The clear conclusion, though, was that interest rates need to hold up for longer – as the forecasts showed.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
New Zealand Rates Held Higher For Longer As Hawks Fly!
The Reserve Bank of New Zealand left the Official Cash Rate at 5.5% on Wednesday, saying that Restrictive monetary policy has reduced capacity pressures in the New Zealand economy and lowered consumer price inflation. Their statement on Monetary Policy had a decidedly hawkish tone, signalling rate cuts will be delayed until around August 2025, which is implying that markets are pricing cuts about 12 months too soon. This is important as we will see, later.
And folks, 5.5% is significantly higher than the weaker 4.35% in Australia, suggesting that we could be facing higher for longer too.
The report said annual consumer price inflation is expected to return to within the Committee’s 1 to 3 percent target range by the end of 2024. That said, in an economic note, ASB says they continue to expect the RBNZ will remain on hold until early 2025, but the risks are tilted to a later start. The RBNZ’s forecasts have inflation holding up higher for longer, with inflation not back to 2% until 2026 (though it is a rounding error from that mark over the second half of 2025).
The RBNZ did discuss the possibility of lifting the OCR at this meeting but didn’t see the need given inflation is still expected to be comfortably back in the target band over the “medium term” i.e. the next couple of years. The clear conclusion, though, was that interest rates need to hold up for longer – as the forecasts showed.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Contrary to the bankers claiming digital payments are replacing cash, yet more evidence is showing that use of cash is on the RISE! We look at data from New Zealand based on a recent survey as the Reserve Bank there announces pilots to make access to cash easier.
The trend of rising cash use was in fact confirmed recently by the RBA too, though their surveys are just not up to the New Zealand standard, and of course using cash more is also rising in the UK.
Not only is the ongoing use of cash a human right, a protection of freedom, and cheaper than other payment means, but it is also proving to assist households with their budgetting. Do not believe the bankers’ BS…
RBNZ Short: Why Access To Cash Is Essential For Social Cohesion Short: https://youtube.com/shorts/d32BqMmfwUc
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
Don’t Believe The Bankers: More People Are Using Cash!
Contrary to the bankers claiming digital payments are replacing cash, yet more evidence is showing that use of cash is on the RISE! We look at data from New Zealand based on a recent survey as the Reserve Bank there announces pilots to make access to cash easier.
The trend of rising cash use was in fact confirmed recently by the RBA too, though their surveys are just not up to the New Zealand standard, and of course using cash more is also rising in the UK.
Not only is the ongoing use of cash a human right, a protection of freedom, and cheaper than other payment means, but it is also proving to assist households with their budgetting. Do not believe the bankers’ BS…
RBNZ Short: Why Access To Cash Is Essential For Social Cohesion Short: https://youtube.com/shorts/d32BqMmfwUc
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
We had important releases from Stats NZ and The New Zealand Central Bank, which combined highlights a weird and unsettling cognitive dissonance. It was perhaps a matter of perspective, because the focus was on the financial system, not individual households, but given the economy is so strongly connected to what households and businesses do, the stability report appeared unanchored from reality, especially given the prospects of higher rates for longer.
And many of the themes we look at here, are relevant to other economies, including Australia too.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
Kiwi’s Cracking Under The Pressure, But RBNZ Says Nothing To See Here!
We had important releases from Stats NZ and The New Zealand Central Bank, which combined highlights a weird and unsettling cognitive dissonance. It was perhaps a matter of perspective, because the focus was on the financial system, not individual households, but given the economy is so strongly connected to what households and businesses do, the stability report appeared unanchored from reality, especially given the prospects of higher rates for longer.
And many of the themes we look at here, are relevant to other economies, including Australia too.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
In an increasingly globalized workforce — which intensified in the wake of Covid-19 as nations looked to fill acute worker shortages — New Zealand is a desirable destination. It was ranked the most attractive nation in the OECD for skilled migrants, according to a 2023 report by the Paris-based organization, which rated the country highly in categories such future prospects, family environment and inclusiveness.
But the volume of arrivals is now raising concerns about pressure on infrastructure, rising house prices and the ability of the economy to meet the extra demand for goods and services. That could in turn fan inflation, compounding the strains.
“Very strong population pressures will continue to stress the economy,” said Kelly Eckhold, chief New Zealand economist at Westpac in Auckland.
The Reserve Bank of New Zealand has picked up on the trend, citing the impacts of high immigration on house prices and rents. That may see it hold its benchmark rate at 5.5% until the end of this year or into 2025, even if global peers begin to lower theirs, though even that is less certain now.
And as we look are Ireland, the UK and Australia, its the same story. High migration lifts housing costs and drives inflation. Time for politicians to flex their strategies, as New Zealand and Canada have already done!
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
In an increasingly globalized workforce — which intensified in the wake of Covid-19 as nations looked to fill acute worker shortages — New Zealand is a desirable destination. It was ranked the most attractive nation in the OECD for skilled migrants, according to a 2023 report by the Paris-based organization, which rated the country highly in categories such future prospects, family environment and inclusiveness.
But the volume of arrivals is now raising concerns about pressure on infrastructure, rising house prices and the ability of the economy to meet the extra demand for goods and services. That could in turn fan inflation, compounding the strains.
“Very strong population pressures will continue to stress the economy,” said Kelly Eckhold, chief New Zealand economist at Westpac in Auckland.
The Reserve Bank of New Zealand has picked up on the trend, citing the impacts of high immigration on house prices and rents. That may see it hold its benchmark rate at 5.5% until the end of this year or into 2025, even if global peers begin to lower theirs, though even that is less certain now.
And as we look are Ireland, the UK and Australia, its the same story. High migration lifts housing costs and drives inflation. Time for politicians to flex their strategies, as New Zealand and Canada have already done!
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
US Federal Reserve chairman Jerome Powell has confirmed fears that interest rate cuts in the US would be later rather than sooner as inflation remains stubbornly high. If that price pressure persists, the Fed can keep rates steady for “as long as needed,” Powell said. This came after US retail sales figures for March came in much stronger than expected, stoking speculation rates would stay higher for longer.
This is a theme reinforced by the IMF, who published a report, while data form the UK and New Zealand also reconfirmed the stickier story.
The risks to markets and households are rising.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
