OCR cut to 2.25% today

Thursday 10th March 2016, 08:40am

The Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis points to 2.25 percent.

The outlook for global growth has deteriorated since the December Monetary Policy Statement, due to weaker growth in China and other emerging markets, and slower growth in Europe. This is despite extraordinary monetary accommodation, and further declines in interest rates in several countries. Financial market volatility has increased, reflected in higher credit spreads. Commodity prices remain low.

Domestically, the dairy sector faces difficult challenges, but domestic growth is expected to be supported by strong inward migration, tourism, a pipeline of construction activity and accommodative monetary policy.

The trade-weighted exchange rate is more than 4 percent higher than projected in December, and a decline would be appropriate given the weakness in export prices.

House price inflation in Auckland has moderated in recent months, but house prices remain at high levels and additional housing supply is needed. Housing market pressures have been building in some other regions.

There are many risks to the outlook. Internationally, these are to the downside and relate to the prospects for global growth, particularly around China, and the outlook for global financial markets. The main domestic risks relate to weakness in the dairy sector, the decline in inflation expectations, the possibility of continued high net immigration, and pressures in the housing market.

Headline inflation remains low, mostly due to continued falls in prices for fuel and other imports. Annual core inflation, which excludes the effects of transitory price movements, is higher, at 1.6 percent.

Source: Reserve Bank of New Zealand website.

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Monthly Review - February

Friday 4th March 2016, 12:14pm

Monthly Summary February 2016

Interest Rates - Comments

RBNZ Governor Wheeler acknowledged that a lower OCR may be needed over the coming year, though they look to be on hold for now. OCR at 2.5% there is still scope for it to move lower with expectations of 50bps of cuts through till the end of the year, and for the OCR to remain on hold for most of 2017.

While additional OCR cuts from RBNZ could see mortgage rates fall, increases in global funding costs are pointing to higher rates.   We are still a savings deficient nation; however banks are less reliant on offshore mortgage rates than they were prior to the GFC.

Next OCR review is 10 March 2016.

Property Indicators   Record-low mortgage interest rates, tight dwelling supply and booming net immigration continue to support the housing market. Nevertheless, prices remain stretched relative to both incomes and rents, particularly in our largest city, where prices have started to recede. Attention is now shifting to the regions, which are playing catch-up. Households continue to exhibit leveraging-style behaviour with borrowing outstripping income growth.

Economic Check  The economy is performing well right here and now, and we generally expect respectable growth over 2016; New Zealand is more than dairying, there are other bright spots, and the economy has better structural foundations now.  The global scene; risks are elevated and weaker export prices (not just dairy) and higher global funding costs are a nasty mix for a commodity-dependent borrowing nation.

Other notes: Construction RBNZ bulletin states The Canterbury economy has proved resilient to the substantial destruction caused by the 2010 and 2011 earthquakes. The report, 'The Canterbury rebuild five years on from the Christchurch earthquake', provides an update on the economic progress made in the Canterbury rebuild.

Employment in construction has grown strongly, labour force participation in the region is higher than the rest of the country, and unemployment lower, the report’s authors say.

It is estimated that the total value of the rebuild will be $40 billion (in 2015 dollars). The rebuild is expected to continue for many years, with the reconstruction of commercial property yet to begin in earnest, anchor projects in the CBD still to be confirmed, and insurance claims yet to be settled.

As construction sector activity unwinds, other sectors will need to expand activity. In particular, activity in the tourism and education sectors remains substantially below pre-quake levels.

Information summarised from a mix of monthly reports from financial institutions.

This summary is of a general nature does not take into account your financial situation or goals and is not a personalised adviser service. Information is provided from sources that the author believes to be reliable; it is indicative and subject to change without notice.

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10 Magic Words that Influence Buyers

Monday 14th September 2015, 09:49am

Emotions are a powerful force.

Long before they can speak or read, infants can recognise emotions in other babies at just five months old. Recognition of familiar adults’ and adult strangers’ emotions kicks in at six and seven months.
It’s clear that our feelings are right there from the start. Prospects obviously aren’t infants, but the best way to move them toward a purchase decision is still to appeal to their emotions.

Make no mistake - logic matters in buying decisions, and you’ll have to prove ROI and demonstrate how your product fits into a prospect’s business plan. But there are a few conversational tricks you can use to appeal to your prospect’s emotions over their intellect.

For example, use short, basic language instead of complicated phrases. “There’s more” is more effective than “additionally,” while “better” trumps “superior.”

And as salespeople know, choosing your words carefully is essential to closing deals. So what are the 10 most emotionally effective words a salesperson can use? Here they are in no particular order.


When 2 groups of people received 2 different donation-seeking letters - one with stats, one with an emotional story...The emotional letter received an average donation over 2X higher than the statistics-laden letter!

Terms that influence online shoppers to buy...

"Free Shipping"   77%   "Free Returns" 56%  "In Store Return Option" 43%

Free is far more powerful than any other discount.  Did I mention our free service at Switcher and Sortme?

(These notes from HubSpot Blogs)

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Entrepreneur event

Tuesday 8th September 2015, 10:24am

Diane Forman - one of New Zealand's most successful entrepreneurs.
In Dunedin this Thursday 10th September at 5:30pm. Looking forward to the event!
www.chamberofcommerce.co.nz Tickets $10

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Our client saved $10,000 p.a.

Monday 3rd August 2015, 12:19pm

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