Jul 15, 2008

Will Bollard Cut Rates Before The Election?

Well there are mixed views out there. Non-tradeable inflation is down a bit, that is all that Bollard can really influence (well he can influence imported inflation by influencing the exchange rate and keeping it higher that it should be), but as Brian Fallow notes the pressure will be really on employers to offer higher wages to compensate workers for a higher cost of living.

What do other commentators think? Mixed views. Some still see an early cut as possible, others now see increased reason for delay.

All the signals from the Beehive to Bollard are to cut, with a September cut being the latest option. We still think that a September cut is likely. If it doesn't occur, the implications are very bad for Labour.