Low floating rates not getting much response
In the BNZ Weekly Overview he says if we were to see a surge in retail spending we would expect by now to be seeing a lift in credit demand. But we are not.
He also believes the Reserve Bank will feel justified in continuing their indication of tightening monetary policy in the middle of the year with the net percent of businesses planning to raise their selling prices rising to 26% from 18% in December.
"This is the highest result since September 2008 just before the Lehman's investment bank collapse. And even though the actual inflation rate is 2% with a 0.2% fall in consumer prices over the December quarter, year ahead inflation expectations are at 2.56%."
Alexander also acknowledges that most of the economic releases recently in New Zealand have been on the not so good side, so it was pleasing today to see something surprising on the strong side - even if it is only attitudes and not actual spending measures.
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