‘If you want the rainbow, you got to put up with the rain’ Steven Wright.
We can see that there are plenty of challenges facing the New Zealand economy currently as well as more locally on household budgets. Key indicators of economic confidence, consumer spending, asset prices etc are all softening and indicating a sluggish economy.
According to conventional wisdom, a sluggish economy tends to reduce demand for credit which tends to keep interest rates low.... All else being equal. Robust economic conditions on the other hand, tend to increase demand for credit, which tends to push interest rates higher... all else being equal. The problem is “all else” is almost never equal...
Malcolm Knight
Director, Financial Advisor
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