ASB has wasted no time cutting its floating mortgage rate following today's cut to the official cash rate (OCR).
The Reserve Bank cut the official cash rate to 3.25 percent, from 3.5 percent at 9am.
Within a couple of minutes ASB announced it was cutting its variable home loan by 0.25bps to 6.50 percent.
Other banks including Kiwbank, ANZ and The Co-operative Bank quickly announced cuts to their floating rates as well.
The cuts won't always take effect immediately. It can vary from tomorrow until the end of next week, depending on whether a customer is new or an existing bank client.
The Co-operative Bank chief executive Bruce McLachlan said: "We take our guidance on the direction of interest rates from the Reserve Bank and today they've given a strong signal that the immediate direction of interest rates is downwards."
A tough call
The OCR had been steady at 3.5 percent since July of last year.
Today's cut would have been a tough decision for Bank Governor Graeme Wheeler. Inflation is at near-zero levels and there are signs the economy is easing, with global dairy prices down almost 50 percent.
But a cut to the OCR makes borrowing cheaper (hence the immediate cut to ASB's floating rate). Lower rates will add more fuel to an already overheated Auckland property market. The latest QV figures show residential property values rose 16 percent in Auckland on average over the past year (compared to 9 percent nationally).
A poll by the NZ Institute of Economic Research's shadow board of economists, business leaders and academics yesterday said that the OCR should be left on hold. But the NZIER said it was a very close call.
The dollar
The currency markets also reacted swiftly to the OCR cut. The New Zealand dollar fell more than 1 percent in value this morning.
At 8am the Kiwi was trading at 71.99 US cents. It was 92.82 Australian cents, 46.35 pence and 65.39 euro.
By mid-morning the Kiwi was trading at 70.67 US cents, 91.35 Australian cents, 45.60 pence and 62.49 euro.
What is striking is how far the Kiwi has fallen since the middle of last year. Back then the Reserve Bank was finishing the round of rate hikes that saw the OCR go from 2.5 percent to 3.5 percent.
The NZ dollar was trading at 88 US cents last July and was trading at 78.90 cents in the middle of January.
The Kiwi is still above its 20-year average of just under 66 US cents. The 10-year average is 74 US cents.
After almost reaching parity against the Australian dollar in April, the Kiwi has lost eight cents.
The NZ dollar was trading around 52 pence early in the year. It's lost over six pence in value.
Fonterra
The confirmation that Fonterra is reviewing staffing levels drew a favourable reaction from farmers.
It is likely one-in-three dairy farmers will fail to break even this season. As global dairy prices have fallen, the concern has been growing about the amount Fonterra spends on its staff.
Fonterra has 11,500 staff in New Zealand and another 6,500 overseas. About 2590 of Fonterra's New Zealand based staff earned over $100,000 last year. Another 1329 staff based overseas earned more than $100,000.
The 2014 financial results reveal that Fonterra has 17 staff who earned over $1 million. But not so long ago it had 29 staff who earned more than $1 million.
The cooperative wants to cut support staff and focus more on sales and marketing roles in an effort to boost its returns.
Units in the Fonterra Shareholders' Fund have fallen 19 percent over the past year to $4.69.
Here is Paul Henry's interview with Dairy Exporter magazine editor at large Glenys Christian.
New Zealand Post
Postal services around the world are facing tough times, and New Zealand is no different.
We are sending half the amount of mail that we did 10 years ago. Urban delivery is cutting back to three days a week and post boxes are disappearing from cities and towns around New Zealand.
NZ Post has launched an ad campaign featuring Game of Thrones actor Charles Dance. But posties are not impressed, at a time when they face the prospect of redundancies
Three-hundred jobs are expected to be cut this year, followed by 100 more next year.
NZ Post chief executive Brian Roche spoke to Paul Henry this morning.
Apple
There has been a lot of talk this week about Apple launching its music streaming service.
But former Apple chief executive officer John Sculley (who ran the company between 1983 and 1993) believes the big deal is really television.
He told CNBC today that: "Apple is going to be a true game changer when it comes to reinventing the experience around how we get our video and video services."
"TV is so ripe to be transformed - much as music was in the '90s. Nobody likes their cable television. The prices are exorbitant that people have to pay and there is little competition. So the timing is really perfect for Apple to come in with serious innovation."
The company already sells a device called Apple TV (including here in New Zealand) but is working on a deal to launch its own TV streaming service. That will see it competing with the likes of netflix and New Zealand's Lightbox.
Netflix is available here in New Zealand on the Apple TV device. So too are YouTube and channels like Red Bull TV.
It will be ineteresting to see whether the launch of an Apple streaming service might see changes to Apple's policy on who it allows to supply apps for the Apple TV device.
3 News
source: newshub archive
