Rising inflation risks
The Reserve Bank delivered some good and bad news for borrowers last week. In the wake of the latest lockdown, interest rates will only rise slowly. The bad news is last time they raised them slowly, they peaked higher than if they had moved quickly.
Strong growth is a key factor driving higher interest rates
The bounceback in economic activity in New Zealand since the first nationwide lockdown last year has been so strong that the unemployment rate has fallen back to the 4% level it was at when we entered that March – May lockdown.
Rate rises delayed but with upside risk
Borrowers could reasonably expect higher rates at their peaks, but not necessarily a faster speed of increase. Our central bank has an established long-term record of too often tightening monetary policy too slowly.
Mortgage rates are going up
On Wednesday 18 August the Reserve Bank will review the record low 0.25% official cash rate set in place back in March 2020 when we were heading into the economic and health unknown