Thursday, December 4, 2008

Mr Conservative

Alan Bollard is inherently conservative and has only ever acted re-actively in his position as Reserve Bank Governor.

The current economic climate, unlike the weather, is melting down and this should lay heavy on his mind.

One might say that he saw all this turmoil coming and left himself alot of room to move interest rate downwards when really needed but I do not credit him with that much foresight-hey he works in a government department how talented can he be?

Like tax cuts, lower interest rates stimulate economic activity, simply because they leave more money in consumers pockets and even though inflation is supposed to be his only target wee Alan should have been cognisant of a failing economy for some time.

Economic pundits have dangled cuts of anything between 1-2% and I myself would contend that 2% would be the more appropriate figure, in fact I have argued for a year that he needed to move downwards.

Given Bollards track record of blind conservatism though it would be a surprise to the market if he picked a rate close to 2%.

I dont buy lotto tickets (I only in markets!) but I am going to stick my neck out and pick a 1.25% cut at 9.00am this morning (NZ Time)

Realated Share Investor reading

OCR puts pressure on investors seeking a better return

Time for OCR intervention by Dr Cullen
Alan Bollard's indecision over OCR a worry to NZ INC
Bollard sits on his hands


Related Amazon reading

The Origin of Financial Crises: Central Banks, Credit Bubbles, and the Efficient Market Fallacy (Vintage)

The Origin of Financial Crises: Central Banks, Credit Bubbles, and the Efficient Market Fallacy (Vintage) by George Cooper
Buy new: $10.36 / Used from: $7.08
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c Share Investor 2008