Gradual interest rate rises expected from RBNZ
(23 March 2012 – New Zealand) The Reserve Bank of New Zealand (RBNZ) is expected to hold official interest rates until December; keeping floating mortgage rates low after weaker than expected economic growth figures from the end of last year were released.
The economy grew a weaker than expected 0.3 percent in the December quarter, with a boost from the Rugby World Cup and a good season for farmers offset by a fall in manufacturing.
Economists had expected economic growth of about 0.6 percent in the December quarter.
ANZ Bank said it ''continued to look for a December 2012 start to the tightening cycle, but stress this is based on assumption that economic momentum will pick up in the second half of 2012''.
However, interest rates rises were expected to be gradual, ANZ said.
That means floating mortgage rates, now as cheap as 5.65 percent, are expected to remain low this year.
Some bank economists have recently suggested that it may be a good idea to fix for two years or more, with rates as low as 5.79 percent, only fractionally higher than floating rates.
Westpac Bank economists said the December quarter was weaker than it expected and the New Zealand dollar fell around half a US cent as a result, although interest rate markets barely moved.
''At first blush, we regard this as a slight downside surprise, but it doesn't alter our overall impression of the economy,'' Westpac said.
Economists had expected economic growth of about 0.6 percent in the December quarter.
ANZ Bank said it ''continued to look for a December 2012 start to the tightening cycle, but stress this is based on assumption that economic momentum will pick up in the second half of 2012''.
However, interest rates rises were expected to be gradual, ANZ said.
That means floating mortgage rates, now as cheap as 5.65 percent, are expected to remain low this year.
Some bank economists have recently suggested that it may be a good idea to fix for two years or more, with rates as low as 5.79 percent, only fractionally higher than floating rates.
Westpac Bank economists said the December quarter was weaker than it expected and the New Zealand dollar fell around half a US cent as a result, although interest rate markets barely moved.
''At first blush, we regard this as a slight downside surprise, but it doesn't alter our overall impression of the economy,'' Westpac said.
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