Tony Alexander

Economic Commentaries

Weekly Overview – March 13

Thursday March 13th 2014

Thus morning the Reserve Bank met expectations by raising the official cash rate 0.25% to 2.75%. They project interest rates rising right to the end of their forecast period in the March quarter of 2017 (thus allowing for rates to still be going higher that year). Their comments on the NZ economy were very positive and on the exchange rate front merely noted that in the long run the NZD will go down from current levels.

The fact that there was an absence of any effort to talk the currency down, that their forecast interest rate track now is higher than it was just three months ago, that they note the positive stimulus to the housing market from the migration surge, and that their growth forecasts are actually lower than most other forecasters still, caused the NZD to jump upward this morning. Expect more.

On the economic data front this week we learned that core retail spending using debit and credit cards rose firmly in February, that business confidence is high and widespread (in our BNZ Confidence Survey), that business demand for staff is soaring (Manpower report), and that although dwelling sales have eased off, finding evidence of more than a cursory easing in house price inflation is hard in the monthly REINZ data.