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Pro Live: Farmers join banks to protest RBNZ capital moves; Big Dairy’s big carbon price forecasts

10.14am - The IMF and the World Bank warned overnight that the tariff wars breaking out between America, China and others are partly responsible for them carving 0.5 percent and 0.3 percent off their respective forecasts for global growth in 2020.

Capital 'war' - Closer to home, farmers joined the big four banks in calling on the Reserve Bank to scale back its proposals to double capital requirements, saying they were already seeing credit conditions tighten and interest rates rise because of the plans.

This debate over capital levels is threatening to break out of its prudential policy cul-de-sac into a full-scale political issue. National Finance Spokeswoman Amy Adams is already arguing against it and the bank rhetoric is ramping up. One Wellington newspaper even described the debate as a 'war'. News the farmers are now joined up with the banks won't be welcomed in the Beehive.

Watch out tonight for more global monetary policy news from the European Central Bank. The tone in the last fortnight has all been around slowing growth and the need to cut interest rates. Central banks are also increasingly saying they are out of ammunition and are calling for fiscal policy stimulus from Governments, what we in New Zealand would have described as 'help from a monetary policy mate.'

Convenient timing - The Government's own forecasts in the Budget were that its spending plans will actually subtract from economic growth to the tune of around 1.5 percentage points of GDP over the next four years. That's down from the 2.5 percent subtraction forecast in December, but shows there's plenty of room for the Government to respond with fiscal stimulus to help our Reserve Bank.

And lo and behold, next year's Budget is the last before the next election...


 


The farmers and the banks v Adrian Orr

Two pronged attack - Farmers joined up with their bankers to protest at the Reserve Bank of New Zealand's plans to double capital requirements for banks.

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