Political & Economic week ahead: will the OCR be again?
Rob Hosking gives his in-depth analysis on the big stories to watch out for this week on NBR Radio and on demand on MyNBR Radio.
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Hawke’s Bay
The spectre of future central bank action hangs over this week. Globally, news from the annual central bankers meeting at Jackson Hole, Wyoming, points to the US Federal Reserve holding what remains of its nerve and lifting the federal funds rate from its present floor of 0.25% by the end of the year.
Locally, the Reserve Bank is to review the official cash rate next week. Governor Graeme Wheeler is widely expected to cut the OCR by a further 25bps, which would take it to 2.75%. Of greater interest will be the updated economic outlook that accompanies the decision. The last full monetary policy statement – released in June – forecast GDP growth to keep running at an average annual rate of about 3.5% over the next three years. That now looks unlikely.
Playing a big part in the outlook will be economic data this week: the main ones being the growth in borrowing, figures for which are out late today, and this morning's building consent data.
Tomorrow morning has the latest terms of trade figures – these have held up, despite the fall in the dairy price, relatively well but the question has always been when, not if, it falls.
And in a related matter, the global dairy price is being released on Wednesday morning.
Politically, it could be a slightly less active week, at least in Wellington. Parliament is not sitting, and ministers are mostly attending events outside the capital. The impact of Labour list MP Jacinda Adern's appearance in the public opinion polls as preferred prime minister for the first time continues to percolate through the political world, with some querying her substance and others deriding her for her looks, while friends such as fellow MP Grant Robertson have moved to defend her.
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NBR Radio
Mon, 31 Aug 2015
Mon, 31 Aug 2015
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Political & Economic week ahead: will the OCR be again?
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