The economic landscape has changed somewhat since my previous article in which I shared that following a reduction in the rate of inflation, many economists were predicting that the Reserve Bank of New Zealand (RBNZ) would announce at the end of February that it was keeping the Official Cash Rate (OCR) at its current level of 5.5%. However, following the announcement of the latest unemployment figures which stand at 4 per cent, a little lower than the 4.3 per cent predicted, there is now uncertainty as I write this article, as to whether the RBNZ will decide to increase the OCR in February and/or April.
The RBNZ could view the lower unemployment figure as a sign that the economy is doing better than expected, increasing pressure to hold interest rates at their current levels for longer, removing any hope that we might have seen a reduction in these rates later this year. Even more concerning though is that economists’ opinions are divided on whether the RBNZ will indeed raise the OCR which, if it does, could see interest rates climb even higher.
Either way, it would appear that the considerable economic challenges that many businesses and households are facing are here to stay for quite a while, with interest rates now not predicted to see any meaningful reduction until next year.
In closing, I would like to sincerely thank you for your ongoing support of our local business community and ask that you please keep shopping locally.
Source: Networker Magazine
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