We have some headwinds with falling dairy prices, a Grexit looming over the Eurozone and many southern European countries increasing their already bad sovereign debt, China’s stockmarket jitters after rapid growth, and now the US economy is looking better and they are likely to increase their official cash rate.
It is very highly likely that the RBNZ will be cutting the OCR this year to at least 2.75% by the end of the year. Some economists have picked it to be cut to 2.25%. This will have a significant impact on floating and short term fixed interest rates, and with our export revenue reducing, wage growth and inflation growth being very low and forecast to remain that way, the medium term interest rates will also follow downwards.
My prediction:
We will see 3 year fixed interest rates fall below 4.50% this year. Some short term interest rates (less than two years) will also tumble below 4.50%, but the carded floating rates will not.
