High Interest Rates Likely to Stay

Brian Fallow's column in today's NZ Herald is well worth a read. He analyses the latest forecasts from the Reserve Bank. The Hive team share his pessimism. While the current high interest rates are hitting home, there are more inflationary pressures on the horizon, with Labour trying to buy another election win, and with the Government's emissions trading regime due to increase costs further, starting next year. The inflationary effect of excessive Government expenditure is being felt most strongly in Wellington where wages and commercial rentals are both being pushed up substantially. It will be interesting to see how the unions and small and medium size business react when they realise how the new emissions trading regime is going to impact on them.