New Zealand’s booming construction projects are bad news for the Reserve Bank, which has been trying to contain them using interest rate rises. After the most recent rise, New Zealand’s key interest rate is 7.75 percent - the highest in the developed world.
Central Bank
Key Interest Rates in Selected Economies
| Country | Bank Rate | Interest Rate |
| New Zealand | Official Cash Rate | 7.75% |
| Australia | Cash Rate Target | 6.25% |
| UK | Official Bank Rate | 5.50% |
| US | Federal Funds Rate | 5.25% |
| Canada | Overnight Rate | 4.25% |
| Eurozone | Variable Rate | 3.75% |
| Japan | Basic Loan Rate | 0.75% |
More Building Work
The Reserve Bank has been trying to put a lid on New Zealand’s property boom for some time now, but with little apparent success. House prices are still rising and last month’s construction figures show that builders are still keen to build new houses. Building consents for both houses and apartments are up compared with the same time last year and the value of commercial building consents rose from $209 million in April 2006 to $297 million in April 2007.
In the light of these figures, there’s an increased likelihood that the Official Cash Rate will rise to 8 percent next week, bringing further pain to people with variable rate mortgages and smiles to the faces of savers with money in the bank.