You wanna be in cash by the middle of the year I reckon
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You wanna be in cash by the middle of the year I reckon
Anything is possible and a lot will obviously depend on the Reserve Bank.
Part of their role is to create stability, one could say their policy decisions in the last three years has created the exact opposite of that.
Adrian Orr enticed people into property with ridiculously low interest rates and now is having to over compensate on the upside.
Interest rates are such a blunt instrument and do very little to contain inflation when it is supply driven rather than demand driven. The medicine could be worse than the illness.
If he goes too hard it could ruin a large group of young people that also withdrew their retirement savings to buy a house in the last three years.
adding to the consumer cash crunch
Rents reach all-time weekly highs
https://www.landlords.co.nz/article/...e-weekly-highs
NZX up 1.7% today. The cynic in me says more than a few fund/account managers are doing their best to mitigate portfolio losses as at 31 March.
There is a problem with raising interest rates as a lever to take money/demand out of the economy. While it impacts borrowers (hard in some cases) it has the corresponding effect of higher interest rates being paid to depositors which returns money into the economy.
I still say the best option in this country at present is to raise the minimum rate of KiwiSaver contribution to 4% (and end any further "holidays"). This takes significantly more out of the economy given more folk are contributors than have mortgages, but the money remains their property in their account whereas money paid as interest by any borrower is dead and gone. Given our savings rate/contribution in this country is far below other countries (Australia is 10.5% contribution presently, about to be raised to 11%) and the yield after inflation from KiwiSaver will be inadequate for most retirements in due course it strikes me as a no brainer.
Of course, ORR can't do this but he could at least make clear to Government it is the optimum solution just now as a trade off against further interest rate rises. But it would be too hard for Labour to do something sensible. They would rather promote a manifestly stupid employment insurance scheme!