The National Bank Business Confidence survey showed an improvement in March, the largest in nine years.
But while a net 15% now expect a deterioration in business conditions, down from a net 39% in February, it’s still more a case of things not being so bad rather than being good.
There is a similar message from Reserve Bank Governor Alan Bollard:
“We expect the large decline in the OCR over the past year to pass through to more borrowers over coming quarters as existing fixed-rate mortgages come up for re-pricing. This, together with the stimulus from fiscal policy, will act to support the New Zealand economy and eventually see activity trough and pick up thereafter. However, the scale of the global financial crisis and domestic adjustments underway are such that it is likely to be some time before economic activity returns to robust and healthy levels.
His comments accompanied his announcement that the Official Cash Rate has been reduced by 50 basis points to 2.5%. I think that’s around the rate when my parents bought their first house in the mid 1950s.
But it’s not just another fall in the OCR that’s significnat, it’s Bollard’s statement that he expects the rate to be at this level or “modestly lower” until the latter part of next year.