The Visible Hand In Economics has expressed interest in our take on Bollard's announcement today. Obviously we think that it is significant that the word "significant" was dropped. Clearly Bollard remains concerned about inflationary pressures but we were struck by his emphasis on the greater than expected slowdown in economic activity. In saying this it would seem that Bollard and team are now seeing things in the same way as The Hive team.
The Hive now has greater confidence in its prediction of an October cut in the OCR as a result of Dr Bollard's comments today. We are glad also that the foreign exchange markets see the writing on the wall. The October cut will be the first in a series which will see a substantial fall in the OCR by the end of 2009.
We are not pricing in the emissions trading regime into our forecasts because we don't think the Government will get its legislation through this year. In this we differ with a number of forecasters.
