Thursday 24th July 2008
|Text too small?|
Bollard will reduce the benchmark rate at each six-weekly review through this year, according to economists at Westpac, Goldman Sachs JBWere, ANZ Bank and UBS. The New Zealand dollar dropped and bills and swaps rallied after today's central bank announcement.
New Zealand's economy probably shrank in the first half amid plummeting consumer confidence as households faced higher costs for food, fuel and credit. Bollard today said a weaker economy will ease pressure on resources and inflation will probably abate after reaching a peak of 5% in the September quarter.
"Rescuing growth is on the agenda for how," Brendan O'Donovan, chief economist at Westpac, said in a note today. Accelerating wagers growth and inflation "won't be enough to see them pause for breath any time soon."
O'Donovan said today's rate cut may have helped prevent a "de facto tightening" of monetary conditions because the global credit crunch has made it more expensive for banks to raise funds overseas to finance New Zealanders' borrowing habit.
"Today's cut will help to mitigate the effect of these increases on the actual borrowing costs paid by firms and households," Bollard said in the statement. Further reductions in borrowing costs will depend on further improvement in the outlook for inflation and no "excessive" deterioration in the New Zealand dollar, he said.
No comments yet
New Zealand Rural Land Company Limited (NZX: NZL) Agreement to acquire large scale dairy asset portfolio
EROAD Limited (NZX: ERD) launches Clarity Solo Dashcam
22nd October 2021 Morning Report
Pictor ready to roll out game-changing COVID antibody test in New Zealand
Scott Technology Limited (NZX: SCT) Announces FY21 Results
21st October 2021 Morning Report
Greenfern Industries Limited (NZX: GFI) L&Q Notice
TruScreen Group Limited (NZX: TRU) Clinical Trial Results Highlight Efficacy of TRU Technology
20th October 2021 Morning Report
Freightways Limited (NZX: FRE) Acquisition of ProducePronto