Credit card spending creeps up but not worrying Bollard

Tuesday 21st September 2010

New Zealanders’ spending on their credit cards ticked up last month, though it’s still fairly muted and shouldn’t give the Reserve Bank any cause to rethink its strategy.

Total card billings rose 0.5% to $2.4 billion last month and are up 2% from the same month a year ago, according to RBNZ statistics. Bank of New Zealand senior economist Craig Ebert said the trend has been flat for some time, and the tick higher won’t be out of central bank Governor Alan Bollard’s comfort zone.

“I think it will encourage him to persevere with caution,” Ebert said.

“There’s been a patch of data recently that has been disappointing, but underneath it there’s a recovery coming through.”

Last week, Bollard held the official cash rate at 3% and pared back his forecast track to hike interest rates as the recovery loses momentum amid a declining property market and tepid consumer spending.

BNZ’s Ebert said the bank’s forecast recovery was always a long slow grind after the exuberance of the housing boom through much of the last decade, and it will take some time before households have managed to pay down their debt and consider getting back into growth mode.

“Everybody’s trying to come down from the cloud,” he said.

Businesswire.co.nz

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