The New Zealand economy has a little less wind in her sails than usual. Many financial commentators believe that growth will stabilise and begin to recover gradually in early 2020.
In November the RBNZ surprised the market and left the Official Cash Rate (OCR) on hold at 1.00%, deeming economic developments had not warranted a change in stance since the 50bp August OCR cut. Accommodative credit conditions are of paramount importance when it comes to keeping things moving. The RBNZ is certainly throwing everything at it and some economic commentators believe that the OCR will be cut to just 0.25% by May 2020!
There seems to be some credit headwinds from the banks these days, and availability is tightening up. RBNZ has recently revealed new capital requirements for locally incorporated banks and market sentiment is that this will push up lending interest rates, lower deposit interest rates and restrict credit availability.
What does this mean for our investors here at Midlands? Well, in a nutshell we are open for business and believe in the quality of our product and hope to continue our strong track record of delivering results.
Elliott Jackson, Investment Manager