This will create headaches in house prices, but should help lift spending and could drive our inflation rate up from its virtually non-existent level.
A stagnant OCR should keep short-term rates largely on hold. Longer-term rates tend to be dictated by international forces.
That throws up different things to think about if you are a borrower or an investor.
Retirees are having to look at different options, but it's hard to get an income from their cash when equities are looking particularly volatile.
Borrowers meanwhile are eagerly trying to fix their loans at the cheapest possible point.
The problem for both is the future is impossible to predict with any degree of accuracy.
Move a chunk of your money into a more aggressively invested fund and you might find its value plummets the next week. Fix your home loan at what looks to be a great rate and it could be just days later that the bank comes out with an even better special.
In both cases, the best idea is to look for a rate or solution that best fits your needs and personal circumstances, as well as your willingness to take on risk.
Think more about how your budget works than the advertised rates on offer or what your neighbour is doing.
Good advice becomes so important in times such as these.
- Jeremy Tauri is an associate at Plus Chartered Accountants.
