[ad_1]
1News Business Correspondent Katie Bradford gives the forecast for economic news this week. With the country, two weeks out from an election, interest rates, policies and petrol will be the words on everyone’s lips.
Interest rates
Wednesday – it’s all about the Official Cash Rate this week, and a warning now: it’s likely to be boring. Or, in other words, hold steady.
The Reserve Bank’s Monetary Policy Committee will release its six-weekly decision on the OCR on Wednesday afternoon, and it’s likely to remain unchanged.
It’s been at 5.5% since May, making this the third review in a row when it’s been left static. After such rapid rises over the last year, the aim is to allow some breathing room and see where interest rates and inflation head.
Interest rates continue to trend up, but they tend to lag movement in the OCR, so the Reserve Bank will wait to see just how high they go. The average floating mortgage rate now sits at 8.62% (but don’t forget the good news for savers – the average six-month term deposit rate is a pretty 5.78%).
The committee will also have looked at the June quarter GDP figures and the minuscule growth in the economy, although ANZ have warned the small numbers mean it’s unlikely to be a “game-changer”. It’s all in the language of the decision.
While a hold is likely, especially just days out from the election, there are likely to be hints of what’s to come. And that may include another hike by the end of the year, especially if inflation remains sticky.
The US Fed Reserve has warned it may lift again before the end of 2023 and that rates may remain elevated for some time. Markets here have priced in another 0.25% lift too, with cuts not expected until later in 2024.
With a quarter of mortgage holders still to refix and face those higher rates, that can’t come soon enough.
Petrol – ongoing
The global oil price is soaring. Combine that with the weak New Zealand dollar, and the price at the pump continues to sting.
The Commerce Commission’s attempts to rein in the fuel companies have done little to slow those price rises. The cheapest 91 in Auckland is now $2.82 (according to Gaspy), but in many places, it’s well past three dollars a litre.
And with warnings it could hit $3.50 by Christmas, don’t expect a drop any time soon.
Election policies
Less than two weeks to go.
All parties have now released revised fiscal plans, following the less-than-rosy PREFU. Most spending promises have also been unveiled, although both National and Labour have left a few million sitting there for “unannounced” pledges.
So we may see a few small announcements over the next 10 days.
[ad_2]
Source link