Heather du Plessis-Allan: Grant has opened the money hose

Lock it in; it looks like a very good chance that your mortgage rate is going up, because Grant opened the money hose too much yesterday.

The economists at almost every one of our big retail banks have come out in the last 24 hours now predicting a bigger hike in the OCR either next week when Adrian Orr resets it, or in July when he comes back for round two.

BNZ says the Budget is the straw that broke the camel’s back re the official cash rate.

They'd already pencilled in a 25bp hike for the next rise, and they’re now adding a second 25bp hike in July.

ASB’s going harder.  They reckon it’s a double hike of 50bp next week.

Westpac’s going even harder.  They reckon it’ll hit 6%… so another 75bp at some point. 

And this is basically because Grant just made Adrian’s job harder for him.

Grant —as ASB says— opened up the fiscal taps more than what we had expected and they’re describing this as ‘quite stimulatory.’ 

To put it in context, yesterday Grant blew his own budget. He spent more in his operating allowance than he said he would.

He spent $4.8 billion.

That is the second biggest budget in the history of this country.

When he spent the biggest —which was $6 billion last year— he promised it was a one off and he would spend no more than $4 billion this year.

But he’s spent a lot more.

20% more.

So we will pay for that, probably through mortgage rates.

This budget spent a lot of money helping a surprisingly few to deal with the cost of living crisis.

For the rest of us it looks like it’s about to make it worse starting next week

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