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Heather du Plessis-Allan: Grant has opened the money hose

Author
Heather du Plessis-Allan ,
Publish Date
Fri, 19 May 2023, 6:00pm
Photo / Getty Images
Photo / Getty Images

Heather du Plessis-Allan: Grant has opened the money hose

Author
Heather du Plessis-Allan ,
Publish Date
Fri, 19 May 2023, 6:00pm

Lock it in; it looks like a very good chance that your mortgage rate is going up, because Grant opened the money hose too much yesterday.

TheÌýeconomistsÌýatÌýalmostÌýevery one of our big retail banksÌýhaveÌýcomeÌýout in the last 24 hours nowÌýpredictingÌýa bigger hike in the OCRÌýeitherÌýnext week whenÌýAdrianÌýOrrÌýresets it, or inÌýJulyÌýwhen he comes back for round two.

BNZÌýsaysÌýthe Budget is theÌýstraw that broke the camel’s back re the official cash rate.

They'dÌýalready pencilled in a 25bp hike for the next rise, andÌýthey’reÌýnow adding a second 25bp hike inÌýJuly.

ASB’s going harder. ÌýThey reckonÌýit’sÌýa double hike of 50bp next week.

Westpac’s going even harder. ÌýThey reckon it’ll hit 6%… so another 75bp at some point.Ìý

And this isÌýbasicallyÌýbecause Grant just madeÌýAdrian’sÌýjob harder for him.

Grant —asÌýASBÌýsays— openedÌýupÌýthe fiscal taps more than what we had expectedÌýandÌýthey’reÌýdescribingÌýthis as ‘quite stimulatory.’Ìý

To put it inÌýcontext, yesterdayÌýGrantÌýblew his own budget. He spent more in his operating allowanceÌýthanÌýhe said he would.

He spent $4.8 billion.

That is the second biggest budget in theÌýhistoryÌýof this country.

When he spent theÌýbiggest —which was $6 billionÌýlast year— he promised it was a oneÌýoff and he would spend no more than $4ÌýbillionÌýthis year.

ButÌýhe’sÌýspentÌýa lot more.

20% more.

SoÌýwe will pay for that, probablyÌýthrough mortgage rates.

This budget spent a lot of money helping aÌýsurprisinglyÌýfewÌýto deal with theÌýcost of livingÌýcrisis.

For theÌýrest ofÌýus it looks likeÌýit’s about to make it worse starting next week

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