The Rates Blog » David Chaston

Aussies leave their official rates unchanged

David Chaston — Tue, 07 Jul 2009 04:49:45 +0000

The Reserve Bank of Australia today left its cash rate target unchanged at 3.0%.

In a statement that accompanies the decision, RBA Governor Stevens noted that monetary policy in Australia has been eased significantly. “Market and mortgage rates are at very low levels by historical standards, despite recent small increases” he said.

Prospects for inflation problems seemed distant, even though the Australian economy appears to be coping much better that most of its trading partners.

He also noted that Australian business loan rates are below average. “The effects of these [low interest rate] changes will still be coming through for some time yet. Fiscal measures are also providing considerable support for demand”, Stevens said.

The RBA decision to hold rates at 3% leaves them 0.5% above the New Zealand official rate, and probably embeds the premium Australian bonds have over New Zealand bonds from a uridashi and eurokiwi demand perpsective. This may weigh on the NZD exchange rate during July and August.

The next review in Australia is on August 4, 2009, five days after the RBNZ reviews the OCR here.

Govt’s accounts better than expected in May

David Chaston — Thu, 02 Jul 2009 23:24:54 +0000

The eleven month accounts published today by the Treasury show that its financial situation improved somewhat in May.

The total Crown operating balance improved from a deficit of almost $7.7 billion in April to under $7.2 billion in May, an improvement of more than $0.5 billion for the year.

OBEGAL, the operating balance excluding portfolio gains and losses, improved even more - from a deficit of $1.8 billion to $1.2 billion at the end of May.

The main reasons for these improvements are that benefit claim levels have not been as high as projected - not yet anyway - and that The NZS Fund and ACC have reported higher‐than‐forecast investment gains.

Tax revenues from individuals is close to expectations, but tax revenues from companies is down noticeably as profitability vanishes from many firms.

Similarly, tax revenues from interest payments is not growing as it once did. It is now level pegging with the same period last year, as the impact of lower interest rates, and tax-advantaged PIE accounts both limit withholding tax revenue growth.

New car sales stabilising at a low level

David Chaston — Thu, 02 Jul 2009 21:39:28 +0000

Sales of new cars in June were down 36% compared with the same month a year ago, according to registration data released today by the NZ Transport Agency. However 4,306 vehicles were sold, higher than the 3,525 in April and the 3,975 in May.

Toyota’s share was 18%, followed by Ford and Hyundai at 9% share.

Commercial vehicles had a similar pattern of sales - down 36% from the same month a year earlier, but higher in June than for any of the other months of 2009.

New annual sales rate of new vehicles is now down to just 80,000, its lowest level since 2002.

Sales of used car imports were down 23% from June 2008, but also higher than any month since February 2009.

ANZ-National tweaks short-term deposit rates

David Chaston — Thu, 02 Jul 2009 04:00:48 +0000

Siblings ANZ and the National Bank both tweaked their term deposit rate offerings for terms under six months today, focussing their key rates at 4.5% for a $10,000 deposit.

ANZ moved its 4.50% rate from 3 months to six months, while the National Bank moved it from 3 months to 5 months. Both banks have adopted their new 3 month rate as 3.75%.

4.50% is now the standard key offer rate for banks for terms under one year. Other offers are
- ASB and BankDirect offering 4.50% for 3 months
- BNZ offering 4.50% for 5 months
- Kiwibank offering 4.50% for both 100 days and 4 months
- RaboPlus offering 4.50% for 3 months
- Westpac offering 4.50% for five months

Smaller banks offer only slightly more; SBS offers 4.65% for 3 months, and TSB offers 4.60% for 100 days.

On the other hand, HSBC’s top rate is only 4.15% for six months for a deposit of $100,000 or more. Kookmin is at 4.30%.

This week, the Reserve Bank announced new prudential liquidity guidelines that are aimed at pressing banks to lengthen their funding offers, and source more funds locally than overseas.

All the current term deposit rates are listed on our two pages here:
- for term deposits less than one year
- for term deposits of one to five years

Kiwi dollar strength cancels commodity price gains

David Chaston — Thu, 02 Jul 2009 03:47:28 +0000

Although New Zealand’s commodities returned similar prices in June to May on an overall basis, the stregthening currency means that in NZ$ terms, returns from our commodities were 5% less in June than May, according to the ANZ Commodity Price Index.

The ANZ Commodity Price Index recorded a modest rise in June in world price terms, increasing 0.2 percent from a month earlier. While only small, the latest increase represents the fourth consecutive monthly rise in the series, said ANZ. The latest rise was fairly broad-based with prices for eight of our key exports recording a lift in the month of June and five commodities recorded price declines.

The sector taking the hardest hit in NZ$ terms was seafood, which was down 8.5% in the latest month, and taking returns back to below their level a year ago. Seafood prices have retrenched dramatically since their high in November 2008.

On the other hand, forestry prices are recovering, but remain very low.

The NZ dollar strengthened against all our major trading partners in the month of June. Consequently, the ANZ New Zealand Dollar Commodity Price Index posted a 5.0 percent decline in June, the largest monthly fall in six months – taking the series back down to a 2½-year low.