OCR Update
The OCR remained at 0.25% yesterday, as expected in light of the current Alert Level 4 lockdown. All indications were that it was going to rise at this announcement, but of course a nationwide lockdown changes things!
The Governor indicated that the Reserve Bank has taken a cautious approach due to the lockdown, and is still looking to get the OCR back up to 1%-2% by the end of next year.
The Monetary Policy Committee noted that the economy is performing better than expected with lower unemployment rates and other indicators showing we are on the improve and have rebounded better than many countries. The changes put in place in March this year are making a difference to the heat in the property market, so the RBNZ are not looking to do anything else at this stage.
Lockdown is adding another layer of complexity to our economic situation, but the Government has accounted for this possibility as it has always been a matter of “when” rather than “if” when it comes to the arrival of the Delta variant in New Zealand. Wage subsidies will kick in again, to help buffer the loss of income associated with lockdown. Though we have lost international tourism earnings, increased domestic spending has offset much of that loss. No doubt when we are out of lockdown, kiwis will continue to travel within New Zealand as we have seen in the last year.
The key thing at the moment is for us all to support each other and maintain our bubbles! We must all stay home unless we need to go out for essential activities, like getting a vaccine, Covid test, seeking medical treatments and of course getting essential food supplies. Please do maintain the 2m bubble when you are out, and wear masks. We know we can do this as we have done it before. This time it is even more important that we minimise our contact with other people, as the Delta variant is very quick to transfer from person to person.
So, stay home and stay safe, and let’s stay in touch with each other. Contact with others is an important part of looking after ourselves in lockdown. Remember to check in on those that you know may be struggling or that are alone. We are here if you need to be in touch.