It was the wet blanket on National’s hopes for a summery economic honeymoon.
Last week Bernard Hickey (my favourite commentator) wrote:
The Reserve Bank last week upgraded its interest rate and house price forecasts to account for:
- · rising net migration, which National-ACT-NZ First has promised to accelerate;
- · higher housing costs, linked to housing shortages that are set to worsen as the Government freezes funding for transport and housing investments by councils;
- · higher services inflation, led by rates increases caused by uncertainty over the future of Three Waters and central Government funding for councils; and,
- · looser fiscal policy through tax cuts, which the new Government has promised to accelerate for landlords, even to the extent of engineering cash rebates on past tax payments.
The Reserve Bank’s forecasts and comments in its Monetary Policy Statement were much more hawkish than the market expected, dashing any hopes for pre-Christmas mortgage rate cuts or any surge in business investment and confidence linked to easing monetary conditions.
The economic and inflation honeymoon is over before it began.