this post was submitted on 12 Jul 2023
18 points (100.0% liked)

Aotearoa / New Zealand

1631 readers
89 users here now

Kia ora and welcome to !newzealand, a place to share and discuss anything about Aotearoa in general

Rules:

FAQ ~ NZ Community List ~ Join Matrix chatroom

 

Banner image by Bernard Spragg

Got an idea for next month's banner?

founded 1 year ago
MODERATORS
[email protected]
[email protected]
18
Reserve Bank leaves official cash rate at 5.5% (www.rnz.co.nz)
submitted 1 year ago by [email protected] to c/[email protected]
14 comments fedilink hide all child comments
 

"The Reserve Bank stuck to the script and left the official cash rate unchanged at 5.5 percent, confirming an end to its 21-month tightening campaign"...

"It said inflation, currently at an annual rate of 6.7 percent, was expected to keep falling as would inflation expectations, with a slowing global economy, an easing in supply chain disruptions, cooler labour and housing markets"...

"It estimated that inflation would be back in the target band in the second half of 2024"...

"We don't expect OCR cuts until May next year, give or take"

you are viewing a single comment's thread
view the rest of the comments
[–] [email protected] 8 points 1 year ago (2 children)

As expected, but OCR at 5.5 for a while is going to hurt.

[–] [email protected] 3 points 1 year ago

Yeah, seems we're gonna be here for a while

[–] [email protected] 3 points 1 year ago (1 children)

What's the average OCR over the longer term?

[–] [email protected] 4 points 1 year ago (1 children)
[–] [email protected] 4 points 1 year ago* (last edited 1 year ago) (1 children)

This just raises more questions!

People talk about the OCR like it's how things work but your link says the OCR was only introduced in 1999. How did things work prior to that? Because I know that people who have bewn around longer than me think of 7% mortgage interest rates as being closer to normal than what we have had from say 10 years ago until recently.

[–] [email protected] 2 points 1 year ago (2 children)

Price controls, tax rates and national wage arbitration between businesses and unions were all inflation influencing levers govt used.

Fucked if I know for the bit between the late 80s and 1999 though cause all that other stuff was dumped throughout Rogernomics era labour and the 90s national govt.

[–] [email protected] 2 points 1 year ago

Thanks for the explanation!

Looking at historical inflation, it seems there weren't many good controls prior to the 90s. Inflation was all over the place.

[–] [email protected] 2 points 1 year ago (1 children)

I think there was some way RBNZ could influence interest rates prior to the OCR... perhaps it was more direct than it is now? I don't know the details, but I'm pretty sure there was something (and can't find any info about it).

[–] [email protected] 4 points 1 year ago (1 children)

Fun fact. Modern inflation rate targeting monetary policy was invented in NZ by Don Brash (and others). It has since become economic gospel for most western banking systems. https://www.nytimes.com/2014/12/21/upshot/of-kiwis-and-currencies-how-a-2-inflation-target-became-global-economic-gospel.html

[–] [email protected] 2 points 1 year ago

That's a really interesting read, thanks for sharing!