Information trickle down
[UPDATE: 7:45PM NZDT:
ANZ and National Bank have announced they are dropping their fixed-term mortgage rates ahead of the next Official Cash Rate (OCR) announcement.
In a statement released today, ANZ and National said their new two-year rate would be 7%, down 0.20%.
Three, four and five-year fixed rates will drop to 7.10%, a fall of between 0.10 and 0.89%. The rates will be effective from tomorrow. The next OCR announcement is scheduled for January 29.
And the public are meant to be impressed by this? Don't be duped by the PR. As I posted last month:
Every bank except Westpac has increased their gross margins - exactly what the Reserve Bank Governor knew would happen - that's why he was particular about publicly warning them not to. And a fortnight is long enough to have passed the bank's lowered costs of wholesale borrowing on. But that's the market - a cartel.The bold is the margin after the cut. Now they drop a sliver off their gouging and their customers are supposed to thank the consistently worst rated bank for customer service for making it rain jellybeans?
The rates get dropped on 5 December, but it only gets passed on - in part - many weeks later. And won't that just be used as an excuse for why they won't fall in line with what the RBNZ does on 29 January.
-- UPDATE ENDS]
RNZ reporting that the S&P credit rating downgrade has affected our dollar. I have always said that credit rating agencies will trigger a NZD collapse - but relative to other economies NZ isn't doing badly and S&P's outlook downgrade was a long-term indicator. Our interest rates are still relatively high and this would be keeping up demand for our dollars and means that the RBNZ Governor can't just whack 2% (or whatever) off the bank's key rate - the dollar would dive. This was partly the thinking behind the extraordinary statement that he would not change the rate between the scheduled times (November I think it was) when other central banks were slashing their rates.
National Bank forex charts tell the tale:You have to wonder at the NZ collective intelligence in this recession. From the RNZ story:
Bank of New Zealand says New Zealand is being 'picked on' by Standard & Poor's.
A NZ Herald story from last week spoke of the lag in understanding what has happened to the global economy:Or 'New Zealanders "she'll be right" attitude prevalent despite crisis' could have been another headline.
Research NZ and their study has shown how disconnected and ignorant the public is - the meltdown started in October. Do people not read the papers? People were more pessimistic in March! Like maybe we are through the worst now... it's summer... lighten up... Business is only too well aware of how fucked things are, but the public - the consumers - seem unaware. And if they really think things are going to be peachy this year and make spending/financial decisions on that basis things will turn even nastier.