Briefly in the news from Aotearoa’s political economy on Tuesday, December 16:
* New Reserve Bank Governor Anna Breman pivoted away yesterday from a tacit approval of higher wholesale interest rates to outright opposition, but not in time to stop the largest bank, ANZ, from increasing its fixed mortgage rates by 20-30 basis points. (Interest)
* Breman said in a statement issued at 3pm she would do media interviews yesterday and today that commented on market interest rates, saying: “Financial market conditions have tightened since the November decision, beyond what is implied by our central projection for the OCR.”
* Breman went on to tell 1News last night that: “My perspective is that if we see a lot of tightening, we have to be very vigilant because we don’t want that tightening to reduce the growth that we’re starting to see happening right now.”
* Wholesale interest rates fell about 10 basis points and the NZ dollar fell as much as half a cent after the statement from Breman.
* Her comments came after Kiwibank Chief Economist Jarrod Kerr wrote in note published on Saturday the Reserve Bank had made a ‘mis-step’ by allowing markets to price in rate hikes next year, when the RBNZ’s own forecast from November 26 suggested no rate hike until early 2027.
* I spoke with Jarrod last night about the pivot in the video above.
* Elsewhere, the BusinessNZ-BNZ (PSI) survey of activity in the services sector in November found a further contraction of the biggest part of the economy that employs the most people, including a worsening of downturns in new orders, sales and employment.
* In Quote of the Day below, BusinessNZ CEO Katherine Rich said the result “put to bed any immediate hope that the sector was heading somewhere towards expansion.”
* The Chart of the Day below shows the combined PMI/PSI surveys of manufacturing and services were consistent with economic growth in early 2026 of around zero.
Quote of the day: ‘Can’t see the growth yet…’
“The November result put to bed any immediate hope that the sector was heading somewhere towards expansion. All five sub-index values were in contraction, with Activity/Sales (45.8) experiencing the greatest level of contraction for the current month. While New Orders/Business (49.3) still hovered just below the no change mark, Employment (46.4) also took a dip from October.
“Despite a stronger level of contraction during November, the proportion of negative comments for November (52.9%) was lower than October (54.1%) and September (58.0%). Negative comments received show the services sector overwhelmingly citing the weak economic environment, including low consumer confidence, high living costs, inflation, interest rates, and reduced spending, as the main factors affecting recent activity.” BusinessNZ CEO Katherine Rich in the PSI release.
Chart of the Day: Inconsistent with ‘growth, growth, growth’
My Picks n’ Mixes of links elsewhere today
Scoops, deep-dives, Op-Eds & columns
* Deep-dive by Lucy Xia for RNZ: Homelessness in Auckland more than doubles in a year
* Jamie Ensor for NZ Herald-$: Foreign buyers ban change passed at night under urgency – so what could be the impact on house prices?
* OneRoof: ‘When? What?’ - NZ’s top agents surprised as foreign buyer ban quietly reversed
* Deep-dive via RNZ Nine to Noon: Nearly 5000 children with rotten teeth waiting in pain for surgery
* Deep-dive via Russell Palmer for RNZ: Infrastructure Commission calls for government business cases, budget submissions to be public
* Investigation by Jeff Horwitz & Engen Tham for Reuters: Meta tolerates rampant ad fraud from China to safeguard billions in revenue
* Investigation by Fox Meyer for Newsroom: Who Benefits: How monopoly money bought NZ’s gambling scene
Substack posts
* Max Rashbrooke for Good IDEAs: How IDEA is already sparking change on welfare-to-work policy
* Paul Krugman: MAGA, the Broligarchs and the Media
* Lina Khan: On Zohran Mamdani, Corporate Welfare & the FTC | The Weekly Show with Jon Stewart
Cartoon: A dose of salts
Timeline-cleansing nature pic
Ka kite anō
Bernard
