News - 1 May 2006

Interest Rate and Currency Comments

The Reserve Bank made no changes to the Official Cash Rate last Thursday, however it also indicated that there was little room for a reduction in the cash rate this year. The market had anticipated early falls, and thus had to back track on previous reductions. Interest rates have risen across the board by around 0.2% in the last 2 days, with some further small rises to come, particularly as longer term US rates have continued to increase.

Rollercoaster will be the trend for the kiwi dollar over the next few months. It will be influenced not only by our large internal deficit (downward pressure), but falls in the US currency (upward pressure) as US interest rates begin to peak. Expect a return to 60 cents US by the end of the year.

(See below for latest interest and exchange rates).

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The Finance Markets

As of 8am on Monday 1 May 2006 the following Interest Rates applied:
Official cash rate 7.25% (stable)
90 day bill rate 7.52% (up)
5 year bond rate 5.93% (up slightly)
NZ/US Dollar 0.6338 (up from 0.6230)

Current Range of Interest Rates for home and investment mortgages as at 1 May 2006.

Floating:
8.60 to 9.95% (stable)

Fixed For:
1 Year - 7.60% to 8.85% (up slightly)
2 Year - 7.60% to 8.95% (up slightly)
3 Year - 7.45% to 8.85% (down slightly)
4 Year - 7.50% to 8.05% (stable)
5 Year - 7.45% to 8.20% (up slightly)

For a complete table of interest and exchange rates, click here.

The information stated herein was correct at the time of release, but is subject to changes without notice.