High interest rates place exports, growth at risk

Thursday, 19 April 2001, 1:52 pm
Press Release: Employers And Manufacturers Association

Media release Thursday, April 18th, 2001

The Reserve Bank's conservatism in cutting interest rates is placing our export competitiveness, and growth at risk, the Employers & Manufacturers Association (Nothern) says.

"The gap between our relatively high interest rates and those elsewhere in the developed world could see a rush of short term money arrive, which would lift our exchange rate artificially and undermine our export competitiveness," said Alasdair Thompson, EMA's chief executive.

"This is the last scenario we want to see.

"The caution of our Reserve Bank in lowering interest rates in line with those in the US, Australia and elsewhere, is raising this risk.

"The CPI figure out yesterday showing inflation fell in the March quarter was not only outside any of the analysts' predictions, it demonstrated the speed of adjustment required at this time.

"We would like to see our Reserve Bank develop a pro active agility to match the speed of change in financial markets.

"The Federal Reserve's 0.5 per cent interest rate cut in the US, out of the blue, emphasises the jolting sense of urgency other jurisdictions employ.

"The fact that our Bank does not act outside its usual time frames, as the Federal Reserve does, illustrates its conservatism."

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

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