No emergency cut was the right choice

I was surprised at the time, but not doing an emergency cut appears to have been the right choice – go RBNZ 😉

I get this impression from here:

Source (NBNZ)

I saw 90 day bill rates rise to 8.1% (from 7.7%) just because of international funding pressures on short-term credit – at least thats what I thought it was. As a result, I felt a 50 basis point emergency cut could be justified. However, the international cuts had already brought us down to about 7.6% that day, and now we are at around 7.1%. This implies to me that the 100 basis points of cuts that are expected next Thursday are also expected to have some bang for their buck – crazy.

So the Bank is right at my expense again, I know they are smarter than me, but I swear they are luckier as well 😉

  • I did well shorting that one on iPredict. Could not see the sense in the early cut.

  • “I did well shorting that one on iPredict. Could not see the sense in the early cut.”

    It appeared that a cut would be consistent with the Bank’s goal for a certain interest rate from September – however, of course the rest of the world cutting interest rates had a flow on effect, fundamentally lowering the interest rate we had to set here to attract capital anyways. As a result, there was no need for a cut here. Obvious now it seems 😛

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