Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Interest rates should be held for now

Media statement Tuesday, December 2nd, 2003

Interest rates should be held for now

It's too early for the Reserve Bank to start ratcheting interest rates up, the Employers & Manufacturers Association (Northern) says.

The continued ascent of the New Zealand dollar against the USD will restrict inflation and should ensure the Reserve Bank keeps the OCR at 5 per cent, said Alasdair Thompson, EMA's chief executive.

"A lot of debate over recent years about interest rates has been driven by the perception that the Reserve Bank tended to be biased towards tighter monetary conditions," Mr Thompson said.

"The blame for that can be fairly laid on the old inflation target which was too tight. With a more relaxed framework in place now, the RBNZ can afford to be less trigger happy.

"With inflation presently at 1.5%, and likely to stay there in 2004 as the NZD puts downward pressure on prices, there is no need for the Bank to raise rates now.

"The housing boom has reached its peak as net migration is slowing.

Increased supply will also keep price inflation in the housing sector in check.

"Exporters' incomes are now under severe strain.

"The bottom line is that the economy is slowing and Bank Governor Alan Bollard can afford to wait and see.

"It would be very unfortunate if he tightened and reinforced the domestic slowdown too rapidly at a time when the export sector is struggling with the high dollar."


© Scoop Media

Business Headlines | Sci-Tech Headlines


Dump Levy Options: Waste Work Programme Announced

Associate Environment Minister Eugenie Sage has announced a programme of work to take action on New Zealand’s long-neglected waste problems. More>>


Real Estate: Foreign Buyers Ban Passes Third Reading

The Bill to put in place the Government’s policy of banning overseas buyers of existing homes has passed its third and final reading in the House. More>>


Nine Merger: Fairfax Slashes Value Of NZ Business

Fairfax Media Group more than halved the value of its Kiwi assets, attaching just A$40 million to mastheads that were once the core of a billion dollar investment. More>>

Collecting Scalpers: Commerce Commission To Sue Viagogo

The Commission will claim that Viagogo made false or misleading representations: • that it was an “official” seller, when it was not • that tickets were limited or about to sell out • that consumers were “guaranteed” to receive valid tickets for their event • about the price of tickets... More>>


Price Of Cheese: Fonterra CEO Goes Early After Milk Price Trimmed

Aug. 15 (BusinessDesk) - Fonterra Cooperative Group chief executive Theo Spierings is leaving the role early after the world's biggest dairy exporter lowered its farmgate payout and trimmed its dividend to retain cash. More>>