[Alan]

Maybe they are: http://www.stuff.co.nz/4458776a13.html

[incredible hulse]

Would think they would have to. The rest of the world are bringing them down to try and counter recession fears where as NZ seems to think it can live in a bubble and keep raising them ! My understanding is the reason they are high are because of inflationary pressures caused by not public spending but spending by the govt.

[johnrt]

The rest of the world are bringing them down to try and counter recession fears where as NZ seems to think it can live in a bubble and keep raising them !

On the contrary, inflationary pressures have pushed many of the world's economies to raise interest rates:- China, Japan, Europe, India, Australia, etc. More interest rate hikes are likely in these economies. New Zealand's interest rates have been steady at a high level since July 2007 and it looks like the next move may be downward.

[incredible hulse]

On the contrary, inflationary pressures have pushed many of the world's economies to raise interest rates:- China, Japan, Europe, India, Australia, etc. More interest rate hikes are likely in these economies. New Zealand's interest rates have been steady at a high level since July 2007 and it looks like the next move may be downward.
Agree the phrasing was generalistic. It was always going to be the case with India and China who have grown massively economy wise, and Oz with a minerals uptake. I understood Japan are looking to decrease rather than increase (and have always been an 'anamoly' in terms of worldwide rates) ? I'm hoping NZ cuts is a given.

[boatieman]

Hi,

This is not a simple as it may first appear. If NZ cuts its interest rats then there maybe a significant knock on effect in the value of the dollar.

“The currency is expected to drop like a stone in the next few months, and the Reserve Bank may well launch a round of interest rate cuts as soon as September with possibly a whopping 75 basis point cut, according to National Bank chief economist Cameron Bagrie.”

Leading to more expensive imports and in the case of NZ, a weaker NZD will buy less oil.
This may not ease inflationary pressure as it will cost more to distribute Goods within NZ and that alone will keep inflation going up.

The interbank borrowing situation is still on going worldwide. Banks are getting very tetchy about borrowing especially if it looks as if they may not get their money back. Domestic banks in NZ are probably getting equally worried about their customers ability to repay. Especially with a possible negative equity situation looming on the horizon for many mortgage holders.

I think that the external pressures maybe the major significant factor, rather than the govt spending. But would add that the govt spending does not help the situation. A tighter rein always boosts confidence. A big drop in interest rates seems to remove confidence in a govts, ability to manage the books.

IMO the most likely situation would be wait and see, rather than act too soon