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Hello, I’m David Chaston with Ninety at nine, brought to you by interest.co.nz. This
is where you get everything you need to know in 90 seconds at 9 o’clock, including news
that central bankers were in the spotlight overnight.
The outgoing Fed boss Ben Bernanke said that the Fed will probably need to hold down its
target interest rate long after ending US$85 bln in monthly bond buying, and possibly after
unemployment falls below 6.5%. Low American rates are here for a very long time yet. The
the Bank of England came out with the same sentiment.
The ECB went even further, raising the real possibility of imposing negative interest
rates - that is, a charge for holding a deposit, possibly -0.1%.
ECB President Mario Draghi said earlier this month that the central bank was “technically
ready” for negative deposit rates. Such a measure is one of the few tools left that
the ECB has to try and stimulate lending. Whether they would want to use it so soon
after cutting the refinancing rate to a record low of 0.25% is debatable. There is apparently
no consensus on this issue within the ECB Governing Council and it is likely to face
stuff pushback from Germany.
Meanwhile, American consumer prices are staying low. They dropped 0.1% in October, and are
up 1.0% over the full year. US retail sales for October were higher than expected. Business
inventories also came in a bit above expectations.
But US October home sales (excluding new builds) were down in volume, up in price on a shortage
of listings. The US national median existing-home price for all housing types was US$199,500
(or NZ$240,000) in October, up 13% from October 2012, which is the 11th consecutive month
of double-digit year-on-year increases. Median New Zealand prices are now 70% higher than
their US counterparts.
In Japan, they posted record exports - especially to the US and China - based on a weaker Yen,
but also its biggest October trade deficit on record. Export growth was overwhelmed soaring
costs for imported fuel in the wake of their nuclear power industry’s shutdown.
Across the ditch, the Aussie-Indonesian row is escalating and getting nasty. It will have
big implications for them, and there may be spillover on us - although we could benefit
if we are careful.
Little to report on stocks, oil, gold, or benchmark interest rates overnight.
The NZ dollar starts today at 83.0 USc, 88.5 AUc, and the TWI is at 77.5.
I’m David Chaston, and that was 90 at nine, brought to you by interest.co.nz.