The full pdf version of the Weekly Overview is contained here.
Weekly Overview 8 September 2016
Thursday September 8th 2016
This week we note that adopting a pessimistic attitude following the GFC has left many people far worse off than if they had simply admitted the uncertainty and tossed a coin to decide what to do. The NZD has risen close to US 75 cents as more people acknowledge the good state of the NZ economy which we expect official data to confirm for the June quarter next week.
This week’s Overview is a short one where I note the good levels of business sentiment, the people I encountered in an auction room last week, and how growth in Auckland house supply is less than elsewhere in spite of the large shortage.
This week we note that if booming retail spending and employment growth are not causing the rate of inflation to rise then trying to encourage people to borrow more and spend more via lower interest rates probably won’t help the RB reach its goal of inflation back near 2%. Yet two more interest rate cuts remain likely in November and February.
This morning the Reserve Bank cut the official cash rate as expected from 2.25% to just 2.0%. But because they signalled only one further rate cut whereas the markets were positioned for two the NZ dollar has rallied to near US 73 cents – in spite of the RB again saying it would be good if it fell.