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Reserve Bank Balancing Act - 27 March 2015

An outstanding presentation from Grant Spencer, Deputy Governor of the Reserve Bank last Friday.

With GDP tracking and predicted to continue tracking in the order of 3.5% per annum well above historic averages, the New Zealand economy is showing positive growth despite recent international dairy prices. A historically high exchange rate while creating significant headwind for exporters has certainly led to stimulation of the domestic economy. This coupled with record levels of immigration and unfulfilled housing demand particularly in Auckland and Christchurch, the outlook for the New Zealand economy as a whole over the next 2-3 years is highly positive. 

The bank again reiterated its view that despite the Reserve Bank of Australia having lowered its cash rate to 2.5%, the Reserve Bank of New Zealand feels that they have the balance right at our current 3.5% cash rate and see this as stable for the foreseeable future.

Grant Spencer not only presented a crystal clear picture of the economy and its likely future track but also did so in a way that gave members a high level of confidence in the skills, abilities and experience of the Reserve Bank team.

 

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