Thursday, November 25, 2021

The Reserve Bank of New Zealand (RBNZ) raised interest rates by 25 basis points to 0.75% during its last policy meeting of the year yesterday, after the rate of consumer price inflation was recorded at 4.9% in the third quarter, the highest since December 2007.

The hike to the national official cash rate (OCR) was widely expected by economists and the markets alike: 21 of the 23 economists surveyed in a November 15-19 Reuters poll predicted an increase of 25 basis points, while the other two projected an increase by 50 basis points, to 1%.

New Zealand’s handling of COVID-19 included injecting “huge amounts of fiscal and monetary stimulus” into the economy, according to The Guardian, in line with other major economies, which has pushed the unemployment rate to the lowest and inflation to its highest in over a decade. Stimulus spending and low interest rates, along with a shortage in housing led home prices to double in the last seven years, the least affordable of the OECD nations, according to Reuters.

A statement from the Reserve Bank said the “near-term rise in inflation [accentuated] by higher oil prices, rising transport costs and the impact of supply shortfalls” are risking “generating more generalised price rises”, as reported by ABC News. The RBNZ forecasts rates would rise to 2.5% by 2023, and still higher by 2024, according to Reuters; however, medians from a Friday article predicted the OCR would reach only 2% by year-end 2023, below what it was in 2014.

More recent projections include to 2% by mid-2022 according to economist at Capital Economics Ben Udy, to a high of 3% by Q3 2023 according to acting chief economist at Westpac Michael Gordon, including a 0.5% rate hike during the RBNZ’s next meeting in February, as reported by The Guardian.

Yesterday’s announcement came after a widely-expected rate hike from 0.25% to 0.5% on October 6, the first in seven years, as part of the RBNZ’s tightening cycle initially slated to begin August but pushed back due to the Delta variant of COVID-19 and lockdown in the capital city Auckland. Senior market strategist at the Bank of New Zealand Jason Wong told Reuters then: “We’re on a path towards a series of rate hikes and the market is well priced for that.”

RBNZ Governor Adrian Orr told reporters yesterday “we see steady steps of 25 basis points back to levels where the OCR is marginally above the neutral rate as the most balanced approach we can take”, though Reuters reports the bank had considered a range of options, including a 50 basis point hike.

Orr added on housing, “Homeowners who have just entered the market with extremely high leverage levels have to be incredibly wary and have to understand they have to weather the higher interest rates”, after earlier taxes levied on property investors failed to cool rising house prices, which Reuters reports the RBNZ believes are above their sustainable level, and at increased chance for a correction. He also defended the stimulus but noted the growth in household debt ensuing.

While countries globally are winding down pandemic-related stimulus measures, according to Reuters, there has been pushback from some countries when it comes to raising interest rates: in the United States, the inflation rate recently rose to 6.2%, the highest in 31 years, which has led some economists to put pressure on Federal Reserve chair Jerome Powell to accelerate the process of tapering its monthly bond purchases, according to the Associated Press. The Bank of England and European Central Bank (ECB) also both withstood criticism for a forecasted rise in inflationary pressures, according to The Guardian and Reuters.

ECB President Christine Lagarde told the European Parliament on November 15 “an undue tightening of financing conditions is not desirable, and would represent an unwarranted headwind for the recovery”, adding “[i]f we were to take any tightening measures now, it could cause far more harm than it would do any good”, as reported by Reuters.

Australia’s Reserve Bank of Australia (RBA) maintained its position that interest rates are not likely to rise until 2024. RBA Governor Philip Lowe told an Australian Businesses Economists lunch last week “the latest data and forecasts do not warrant an increase in the cash rate in 2022”, and for one to be considered by the board “[t]he economy and inflation would have to turn out very differently from our central scenario”, according to ABC News.

However, several central banks have increased rates ahead of even New Zealand: Reuters names Norway, the Czech Republic and South Korea, which is expected to raise rates again in a meeting today.

Reuters reports the New Zealand dollar fell 0.6% due to some investors predicting a higher hike, and both 2- and 10-year government bonds slipped by 10 basis points each.

Tuesday, November 15, 2005

People rallied in 300 locations across Australia today to protest the Federal Government’s proposed changes to industrial relations laws, WorkChoices. According to police, around 150,000 people congregated in Melbourne, from where speeches were broadcast throughout the country. In Sydney, thirty thousand gathered in Belmore Park and Martin Place to watch the broadcast before marching to Chifley Square.

Sharan Burrow, President of the Australian Council of Trade Unions (ACTU), said that under the changes many working conditions would be under threat, including “penalty rates, public holidays, overtime pay, control over rostered hours, shift penalties, even 4 weeks annual leave.” The government has claimed, despite various expert assesment to the contrary, and opposition from major Australian religious and charity organisations and some concern from its own backbench, that the IR changes will improve the economy and ultimately benefit workers, and dismissed the protests as having “little effect”.

Friday, May 26, 2006

After approximately 150 Australian troops from 4 Royal Australian Regiment (Commandos) secured Comoro airport in Dili yesterday, the total number of Australian troops in East Timor has risen to 600, with a further 1200 in transit or directly supporting Operation Astute. Malaysia, New Zealand and Portugal have also begun their deployments. Malaysia has now sent 25 military officers ahead of its 500 strong commitment of military and police personnel; New Zealand has committed two C-130s, and an infantry company is on standby pending negotiations over rules of engagement; Portugal’s 120-strong commitment has commenced preparations, but is not expected to arrive for a matter of weeks. The Australian contingent involved in Operation Astute has been placed under the command of Brigadier Michael Slater, who arrived in Dili this morning.

Currently, the Australian Department of Defence states Operation Astute’s tasks are:

1. to facilitate the evacuation of Australian and other foreign nationals as is appropriate and necessary;
2. to stabilise the situation and facilitate the concentration of the various conflicting groups into safe and secure locations;
3. to audit and account for the location of weapons that belong to each group; and
4. to create a secure environment for the conduct of a successful dialogue to resolve the current crisis.

Australian forces are already actively operating in Dili; Infantry patrols are operating in the area, supported by the four Blackhawks from the 5th Aviation Regiment that have arrived so far. Blackhawks have also been operating missions above the hills around Dili to seek out rebel positions and communicate a strong presence to the rebel soldiers. Two Armoured Personnel Carriers and an infantry platoon have set up position in and around the UN Headquarters and Dili police station, which came under attack earlier today, and was the location of considerable violence yesterday when East Timorese army soldiers killed 12 East Timorese police and wounded numerous others, including 2 UN personnel. “At the moment things are relatively stable, the troops are arriving and we are establishing good control throughout the Dili area” BRIG Slater said of the situation.

Yesterday 80 Australian nationals were evacuated by RAAF C-130, a number that is rising as flights in and out of East Timor have been unhampered since the securing of Comoro airport. Approximately 800 Australian nationals were in East Timor at the beginning of conflict.

Events involving East Timor’s government are complicating the situation. Reports state that Prime Minister Mari Alkatiri is reluctant to allow foreign troops to independently operate in the country and arguing with President Xanana Gusmao over who should control the small nation’s still loyal military of 800 troops. After President Gusmao declared he had taken over command of the military and ordered all East Timorese military personnel to barracks, Alkatiri stated that he believed the President does not have a constitutional right to take control of the military, as that depends on a ‘situation of emergency’ being declared, which is itself dependent on the parliament.

According to Mark Thompson, a military budgeting specialist from the Australian Strategic Policy Institute, Operation Astute would cost a similar amount to Australia’s earlier peacekeeping operation in East Timor – approximately $200 million.

Saturday, September 26, 2009

The Iranian government has announced that the nation will be participating in a missile defense test which could take place as early as tomorrow.

According to the IRNA, Iran’s official news agency, the test is an annual exercise aimed to “maintain and develop” defense capabilities of the Iranian Revolutionary Guard.

The exercise is named ‘Great Prophet 4’ and will involve shooting a variety of live missiles at targets. Reports say the drill will be conducted in several unknown locations and will last for several days. The exercise also falls on the Jewish holiday of Yom Kippur.

The announcement comes just hours after the Iranian government stated that the nation was building a second nuclear power facility. The announcement was made in a September 21 letter from the Iranian government to the United Nations Security Council that a second nuclear plant was being constructed in the city of Qom.