This week’s Overview is just three pages long so its not going to set the world alight. I concentrate on the important issue of making sure you don’t rush to form conclusions about things based upon just one month’s observations. You need at least three months worth of data to say anything really meaningful. If you look at just October you may conclude that house prices are falling in Auckland. But if you smooth over three months what we have instead is a trend of slowing house price rises from the pace of earlier this year.
Note how the NZ dollar is about the same now as it was a week ago against the greenback. But we are up against the other main currencies as the US dollar was boosted by Friday’s strong US employment report. Our strength highlights that compared with most of the rest of the world we are in good shape and the chances are not high that the NZ dollar will undergo any major weakness over the coming year.
Regarding interest rates nothing fundamental has changed. The chances of rate rises in NZ in the near future are very low and a further 0.25% cash rate cut might come on December 10. Watch the possible tightening of US monetary policy next month however to see how it affects long-term borrowing costs in particular.