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Interest costs on top of price rises not necessary

Media release September 28, 2000

Higher mortgage costs on top of price rises not necessary

None of us need be hit by higher interest rates as a result of higher grocery and other prices coming on top of the high petrol and transport costs if we hold back our expectations of higher incomes, says the Employers & Manufacturers Association (Northern).

"Because the New Zealand dollar has fallen further than other currencies against the US dollar, all New Zealanders are poorer than a few months ago, " said Alasdair Thompson, EMA's chief executive.

"Our dollar simply buys less from overseas than it used to.

"The competitive marketplace in New Zealand meant until recently that the higher costs of imports and higher oil prices had mostly been absorbed by New Zealand business.

"Now all of us are facing increased costs.

"But the Reserve Bank has clearly said it will not put up interest rates to counteract this inflation unless New Zealanders seek higher salaries, wages and dividends to compensate for them.

"If we do that Dr Brash will be obliged to raise interest rates, which will harm economic growth and job opportunities.

"MP's especially must not take salary increases even if the Higher Salaries Commission says they can.

"Business leaders too must set an example on this.

"Everyone of us has to accept as a nation we are poorer.

"We desperately need to see leadership on salary and wage restraint just now."

Further comment: Alasdair Thompson tel 09 367 0911 (bus) 09 303 3951(hme) 025 982 024

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