karltsmith
9th September 2004, 02:43 PM
Interest rates rise likely to hit homeowners
09.09.2004
1.00pm
Another rise in interest rates, the fifth this year, is likely to hit homeowners and property investors.
The Reserve Bank today increased the Official Cash Rate (OCR) by a quarter of one per cent to 6.25 per cent.
Economists are now predicting further rate rises before the end of the year.
Infometrics senior economist Gareth Kiernan said the OCR was expected to get as high as 6.75 per cent by December.
He says it is more bad news for property investors, homeowners and builders and that combined with slower population growth, the effects are already being seen with a drop-off in house price growth.
Reserve Bank Governor Alan Bollard, announcing the rise this morning, said the New Zealand economy was performing very strongly and recent economic data had delivered positive surprises.
He added: "Economic growth is near its peak, but resources will remain stretched for some time, and inflation pressures remain strong."
Dr Bollard said the domestic economy had been heavily influenced by housing, which was expected to continue to slow over coming months.
He said: "If that weakening is delayed, then household spending would continue to expand at a rapid rate, fuelling inflation pressures. This could be compounded by continuing strength in the labour market."
This year's rate rises:
September 9, 2004 up 0.25per cent to 6.25 per cent
July 29, 2004 up 0.25per cent to 6.00 per cent
June 10, 2004 up 0.25per cent to 5.75 per cent
April 29, 2004 up 0.25per cent to 5.50 per cent
January 29, 2004 up 0.25per cent to 5.25 per cent
- HERALD STAFF, NEWSTALK ZB, REUTERS :nice1
09.09.2004
1.00pm
Another rise in interest rates, the fifth this year, is likely to hit homeowners and property investors.
The Reserve Bank today increased the Official Cash Rate (OCR) by a quarter of one per cent to 6.25 per cent.
Economists are now predicting further rate rises before the end of the year.
Infometrics senior economist Gareth Kiernan said the OCR was expected to get as high as 6.75 per cent by December.
He says it is more bad news for property investors, homeowners and builders and that combined with slower population growth, the effects are already being seen with a drop-off in house price growth.
Reserve Bank Governor Alan Bollard, announcing the rise this morning, said the New Zealand economy was performing very strongly and recent economic data had delivered positive surprises.
He added: "Economic growth is near its peak, but resources will remain stretched for some time, and inflation pressures remain strong."
Dr Bollard said the domestic economy had been heavily influenced by housing, which was expected to continue to slow over coming months.
He said: "If that weakening is delayed, then household spending would continue to expand at a rapid rate, fuelling inflation pressures. This could be compounded by continuing strength in the labour market."
This year's rate rises:
September 9, 2004 up 0.25per cent to 6.25 per cent
July 29, 2004 up 0.25per cent to 6.00 per cent
June 10, 2004 up 0.25per cent to 5.75 per cent
April 29, 2004 up 0.25per cent to 5.50 per cent
January 29, 2004 up 0.25per cent to 5.25 per cent
- HERALD STAFF, NEWSTALK ZB, REUTERS :nice1