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Mike Hosking: Big day out for Adrian and his reserve bank mates

Author
Mike Hosking,
Publish Date
Wed, 14 Jul 2021, 9:51AM
Adrian Orr. Photo / NZ Herald
Adrian Orr. Photo / NZ Herald

Mike Hosking: Big day out for Adrian and his reserve bank mates

Author
Mike Hosking,
Publish Date
Wed, 14 Jul 2021, 9:51AM

Big day out for Adrian and his reserve bank mates.

The big deal is not what will happen, because nothing will happen.

But if it is going to, when?

The, ‘when’ is the exciting bit.

As dry as Reserve Bank stuff might appear to some, it affects every one of us, the state of the economy is the state of our lives

It is who we are as a country and where we are going and whether we are going in the right direction or not.

The sense of it is, we are doing well enough to warrant some sort of indication as to when interest rates might go up.

The fragility of what they’re trying to deal with has never been better displayed than with the rapid change of commentary we have seen in just the 6 months of this year.

We once were expecting interest rates to be low for years to come, maybe 2024?

Then suddenly it was 2023, then next year, now many seem to think we’ll see movement in November and the suggestion is today is the day that map gets laid out a little.

We are spending like drunks, shelves are empty because ships are a shambles and containers are hard to come by.

We aren’t letting anyone into the country, so every man and his dog is looking for workers.

This puts a strain on things, and by the time you take the empty shelves, the lack of workers and the rest of us lining up to buy stuff, prices rise and that leads to inflation and inflation is contained by raising interest rates.

There is also the matter of Adrian’s printer and his flooding the economy with cash.

And that’s the part we need to watch the most closely.

How much of this so-called economic recovery  is debt, whether Adrian’s or our own, and if it’s too much.

And if Adrian pulls the plug out of the wall and the printer stops, do we implode in panic?

And/or if mortgages start to rise, do we also panic about all the money we’ve borrowed and now have to pay back at a greater rate?

And if the rates are rising, how far and how fast?

You see this is all about confidence, and confidence is hard won but easily shattered.

So it’s a tight rope.

I still maintain it would be a remarkable thing for a country like ours to lead the world in interest rate rises.

Remember no one else is doing it; no one else is really suggesting money printing needs to stop either.

So, are we really that robust?

Today will at least give us some good clues.

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