Call For Interest Rates Cut

Wednesday, 7 March 2001, 4:57 pm
Press Release: Employers And Manufacturers Association

Aussie Recession Signs Ominous; Call For Interest Rates Cut

A early cut in the New Zealand official interest rate is clearly due now in response to Australia's doldrums and the decision there to cut rates further, says the Employers & Manufacturers Association (Northern).

"The doldrums in Australia spell trouble for our $6 billion export trade across the Tasman," said Alasdair Thompson, EMA's chief executive.

"Australia's GDP shrank negative 0.6 per cent in the last quarter of 2000.

"That will likely mean production and demand in New Zealand will drop.

"To soften the landing our Reserve Bank should cut interest rates by at least 0.25 per cent next week.

"Waiting until May for an interest rate cut is a bridge too far if our economy is not to stumble again.

"The signs of wage induced inflation are relatively few; Dr Brash should give credit to New Zealanders for their restraint.

"Fuel prices have also stabilised as has the impact of the low NZ dollar on the price of imports. Only meat represents a risk to inflation but it is only a very small part of the Food Price Index.

"Australia is our largest trading partner by far. Our exports across the Tasman totalled $5955 million in 2000, about 20 per cent with $4196 million of employment rich high value added manufactured goods."

Further comment: Alasdair Thompson tel 09 367 0911 (bus)

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