KEY POINTS:
New Zealand's monetary policy is working, says ASB managing director Hugh Burrett.
ASB had noted a slowdown in the housing market over the past two weeks which ought to put a smile on the face of Reserve Bank Governor Alan Bollard.
"He [Bollard] is probably having some effect, we have noticed in the last two weeks that house-sales volumes have dropped even when you seasonally adjust them," Burrett said.
"I'm sure he will be delighted." Burrett believes monetary policy framework is working properly.
"From what I'm seeing now, I think it is. What you've got to reflect on is we've really had all the stars line up in this particular cycle so everything's been going for a very positive economy."
Consequently, Bollard had been forced to pile on the rate hikes to control inflation.
Burrett retains a positive view on New Zealand's economic outlook. "We still have low unemployment, good positive immigration, our interest rates while they're high, are still reasonable when you think of past years".
He also points to the ongoing surge in commodity prices.
"Normally with the way the dollar's been going, with static commodity prices, we would have been hurting. When you put all these things into the pot, everything is looking pretty rosy which is why there is a level of confidence out there."
