Thursday October 27, 2005

NZ hikes rates to 7%

channelnewsasia.com :

New Zealand's central bank lifted the official cash rate by 25 basis points to 7.0 percent, warning of further rate rises and sending a strong message to home owners to curb their spending. "Borrowers and lenders alike need to recognise that the current rate of debt accumulation is unsustainable," Reserve Bank of New Zealand governor Alan Bollard said in a toughly worded statement. "The most serious risk to medium term inflation is the continuing strength of household spending, supported by a relentless housing market and rapid growth in mortgage lending."

The latest increase is not just bad news for home owners but also means higher borrowing costs for businesses, who are already suffering from high oil prices and a strong currency. Business confidence has plunged, with the ANZ National Bank's latest survey showing a net 55 percent of firms expecting general business conditions to deteriorate over the next year, down from a net 38 percent last month.

- So that means what, the NZ folks can probably get at least 7% interest for their savings accounts? And the Indonesians, I hear, get over 10%. Not too bad, but one must also consider the rate of money growth figures (M1 to M3), ongoing inflation, currency risk, and what TNX is doing.

(2005-10-27 11:58:02 SGT) [Biz] Permalink

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