Cam Slater: Here Comes the Pain Again

Just when you thought you’d made it through the economic pain the Reserve Bank rolls out another massive hike in the Official Cash Rate. Just as people were starting to see light at the end of the tunnel the Reserve Bank announces that the light is in fact the inflation train coming to mow you down.

The Reserve Bank has today raised the Official Cash Rate by 25 basis points – taking it to 5.5 per cent.

The RBNZ said it still sees 5.5 per cent as the peak for OCR. It anticipates cuts from the third quarter of 2024.

That call surprised markets with its softer, more “dovish” approach.

The big turn in immigration numbers and last week’s Budget had shifted market forecasts drastically since the last OCR decision in April.

Where previously, a rate hike to 5.5 per cent this month was expected to be the peak for the cycle, there were growing expectations we’d see the rate move as high as 6 per cent.

The Reserve Bank’s decision to hike the rate by 25 basis points, while largely in line with expectations, unleashed a “crazy” response in the nation’s dealing rooms as it was far more dovish than expected.

Soon after the 2pm, release, the NZ dollar was down by three-quarters of a US cent and wholesale interest rates were off sharply.

The big surprise was that the bank had called the peak in the official cash rate (OCR) at 5.5 per cent.

”It’s crazy, as you would expect,” Westpac senior market strategist Imre Speizer said.

”It’s a very dovish surprise in the OCR track. The 25 basis point hike was not a surprise – that was fine.

”It was the retention of the 5.5 per cent forecast peak.”

”In other words, they are signalling that they have completed the cycle. It’s over. And that was a major surprise for the market as most had expected more rate hikes to come.”

NZ Herald

They aren’t going to raise the rate again – for now, or so they say. What you are staring at there is a political decision. This Labour Government thinks it can weather this storm but they know another rate hike closer to the election would be terminal. It’s political, and that’s why the markets have reacted badly.

While the downward pressure on rates may be helpful in the short term, the decline in the value of our dollar will translate into higher prices on almost everything, including fuel.

The bottom line is, however, that the government has failed to rein in their spending, which is continuing to put inflationary pressure on the market. This Government thinks money grows on trees and unicorns crap out gold nuggets.

At the same time as making you poorer through rising inflation and interest rates, the government has also announced that they want you to save power, creeping into your home to lecture you about how you live.

What they are actually telling you is how to make your life more miserable.

• Checking you’re on the best power plan for you and your whanau
• Switching off appliances at the wall when you’re not using them
• Setting your heat pump to a maximum of 21 degrees
• Changing your washing machine settings to cold wash
• Shortening showers to five minutes.

Is this because we now need to save power so they can allocate it to the new electric furnace we’ve just been forced to pay for?

Are they suddenly waking up to the fact that EVs require electricity that we cannot generate?

The UK Government tried this nonsense and was roundly castigated for it.

This Government has no idea how to make your life better; they’ve spent six years and billions of your own money pouring it into failed projects, and now they want you to vote for them again so they can do more of the same with a heap of racism added in to boot.

No thanks.

Cam Slater is a New Zealand-based blogger, best known for his role in Dirty Politics and publishing the Whale Oil Beef Hooked blog, which operated from 2005 until it closed in 2019. This article was first published HERE