You are using an older browser version. Please use a supported version for the best MSN experience.

Low interest rates 'semi-permanent'

NZ NewswireNZ Newswire 1/09/2016

Houses in the suburb of Mount Wellington in Auckland, where property prices continue to skyrocket. © Brendon O'Hagan/Bloomberg Houses in the suburb of Mount Wellington in Auckland, where property prices continue to skyrocket. Finance Minister Bill English doesn't expect interest rates to start rising any time soon, and he thinks that will be good for most businesses and households.

He told the Trans-Tasman Business Circle in a speech earlier this week the government was trying to get to grips with what the impact of that would be.

The text of his speech was issued on Thursday.

He said low interest rates "now look to be semi-permanent" and could be expected to remain where they are - or go lower - over the next 10 years.

"For most businesses and households, stable low interest rates are positive, not negative," he said.

"Households are encouraged by that stability - the question is whether the worry that eventually those rates will turn around will mean people hold off investing and risk-taking."

He urged his audience to "stand back a bit from the noise in the financial markets", which he said spent too much time focused on what central banks were doing.

"The prospect of of longer-term low interest rates is only just starting to bed in," he said.

"The impact of this on our own economy means we are having to re-learn the relationships between different variables - and the first is connected to housing markets."

Mr English said there was no doubt that the increase in property prices - particularly in Auckland - was driven by the fact that interest rates "just keep on dropping".

"And that affects all asset classes," he said.

"The New Zealand stock exchange, for example, has gone up a lot more than the housing market."

image beaconimage beaconimage beacon