A major bank has tempered its view on how high they think the Reserve Bank may need to push the OCR as we wait for the year’s first indicator of whether inflation is easing, writes Anna Rawhiti-Connell in this excerpt from The Bulletin. To receive The Bulletin in full each weekday morning, sign up here.
2023: here comes the hangover
To a certain extent, the year is still loading on the news front so I thought this week we’d take a topic each day and round up projections, commentary and the current state of play. First up, the economy. Here is the Herald’s Liam Dann (paywalled) with his assessment. “We’re awake, we’re feeling queasy and we know we overdid last night –although the details are a bit hazy,” writes Dann. Dann has looked at the various forecasts made by economists and concludes that while things look rough, the question is still “how rough”, writing that “things could still go either way from here.”
ANZ tempers view on how high the OCR may go
ANZ has tempered its view on how high it thinks the Reserve Bank (RBNZ) will need to push the Official Cash Rate (OCR) to get inflation under control. BusinessDesk’s Rebecca Howard (paywalled) reports that ANZ thinks the RBNZ’s November monetary policy statement (MPS) “appears to have gotten traction”. ANZ’s card spending data for December showed a reining in of spending. Stats NZ releases retail card spending data for December on Wednesday. I certainly felt like I had a small Adrian Orr perched on my shoulder for much of last month. We get the Q4 consumer price index (CPI) data on January 25. This will confirm whether my sparkling Christmas party banter about Orr’s call to everyone to “cool the jets” being an incredibly effective bit of communication was accurate as well as boring.
Job ads fall, applications per job ad rise
US inflation data released last week is being taken as a sign that the global inflation crisis may be easing. US inflation peaked at 9.1% in June and is now at 6.5%. BNZ’s Mike Jones is of the view that inflation has peaked but he positions it less as good news than “just some less bad news.” Over half of all mortgages will roll over in 2023. Where the current average home loan rate is around 4%, Jones predicts it will get to 6.5% regardless of what the OCR is. We get the next OCR announcement on February 22. Data from job site Seek shows the beginnings of a cooling labour market. Job advertisement levels declined in December, while applications per job advert recorded the greatest monthly increase since March 2020.
This year could be “one of the hardest in living memory”
To end, Newsroom’s Emma Hatton has a really good interview with Wellington City Missioner, Murray Edridge. Like Orr, he has a pretty direct message for everyone. Edridge thinks this year could be one of the hardest in living memory for those already on the brink. He spends a lot of time engaging with communities who don’t – and won’t – need extra help. “Let’s face it, for most of us the cost of living crisis is an inconvenience or a frustration. So for people in that place who are thinking: what about the people who don’t have what I have? Don’t look like I look? What about them? Do I need to pay attention to that? My answer is yes, you do.” His message for those of us who won’t be needing support from organisations like the City Mission? “Cut people some slack and treat people with dignity, irrespective of their circumstances.”