Insurance Information

I am sure there will be a collective sigh of relief from many people out there as interest rates are about to drop or, in some cases, have already dropped. 

According to the Radio New Zealand website a larger than expected half a percentage drop to 7.5% in the cash rate will also offer some relief to the growing inflation that sees considerable increases in costs for all businesses and individuals alike.

Here’s hoping that this sees the return of a period of growth for all New Zealanders.

On Thursday 11 September 2008 both Kiwibank and Westpac announced a drop in their mortgage interest rates.

The NZ owned bank reduced its variable rate – dropping to 9.70% - as well as announcing a decline in its two-year fixed rate to 8.49%. Westpac similarly cut its variable mortgage rate by half a percentage.

The only downside to this may be an increased inflation as a result of the drop in the NZD.

Radio New Zealand quoted Alan Bollard, New Zealand’s Reserve Bank Governor:

“The New Zealand economy is experiencing a ‘marked slowdown’, led primarily by the household sector. In addition, the outlook for the global economy has deteriorated further in the wake of continued financial market turmoil, and the New Zealand business sector is coming under pressure from both rising costs and falling demand.”

“While domestic activity is likely to pick up late this year as a result of personal tax cuts, increased government spending and rising rural incomes, we expect a prolonged period of household sector adjustment and below-average growth,”

“The weakness in economic activity is expected to translate into lower inflation pressures in the medium term. Headline inflation is expected to peak around 5% in the current September quarter before trending down thereafter. However, food price inflation, exchange rate depreciation and higher wage costs will tend to keep headline inflation at elevated levels through 2009. With medium-term inflation pressures expected to ease, it is appropriate to move towards a less restrictive monetary policy stance.”

“Looking ahead, the scale and timing of further official cash rate reductions will depend on signs of declining inflation pressures and on exchange rate adjustments.”

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