It’s 2016 and time to look forward.
The purpose of this story is to provide a place where readers can prognosticate; what do you think will happen to our economy in 2016 ?
More specifically, where will interest rates go in 2016 – and why ?
This is also a place were you can give us your views of what will happen to property prices in the coming year.
My personal view is that 2016 will be a year that allows the US Fed to raise its rates four more times from the current 0.5% to 1.50%. I predict it will do that despite some bumps in the road and that markets will come to like the trend and find ways to profit from the moves. But I don’t think they will unwind any of their QE in 2016.
The biggest bumps will come from the bond markets and rising rates drive bond price falls. Not huge ones, but the days of bond price gains will seem to be over. What will be rocky will be the pounding junk bond markets take. But I think the Fed will see that as necessary pain to get back towards more normal interest rates.
In New Zealand interest rates won’t go any lower in my opinion. In fact, my guess is that Graeme Wheeler will be talking about raing them again toward the middle of the year.
I also don’t see our currency falling any further. In fact, 2016 is election year in Australia. It must be held before January 14, 2017 but their new Prime Minister is a risk taker and he will call it early, about September. He will campaign on structural reform, winning his own mandate on the basis of some soft platitudes in the face of a worsening budget deficit. Then he will try to act on his program. I see the AUD falling in the turmoil and the NZD rushing up to parity in the December quarter.
But enough of my guesswork.
This story is to encourage you to record your own 2016 predictions.
They can be on any topic that has an impact on the New Zealand economy: anything, including property, interest rates, exchange rates, insurance, rural issues, the dairy payout, our migration issues, our relationship with China, the big international trade negotiations. But please try to ground them in the economy. (For example fashion or celebrity comments are not relevant, but climate change issues are.)
You will need to be logged in to comment and respect our commenting policies (and respond to others’ differing views in a respectful and civil way).
Over to you.