19 November 2002
Time For Interest Rates To Fall
“The combined effect of a range of factors means that it is now time for the official cash rate to fall,” said Council of Trade Unions economist Peter Conway today.
“The economic outlook for next year is being influenced by a continuing slide in global economic conditions with widening deflationary pressures, falling NZ commodity prices, a rising NZ to US dollar exchange rate, and the prospect of a drought,” he said.
“These factors put together mean that it is unwise to have the official cash rate sitting at 5.75%, which is much higher than our trading partners. “
Peter Conway said that while there were some domestic pressures on prices, they were still unlikely to threaten the top of the inflation band.
“While it will not be surprising if the Reserve Bank Governor keeps the cash rate on hold tomorrow, we will be looking for signs of a cut in the near future,” he said.