Growth and inflation - get the recipe right

Wednesday, 18 August 2004, 10:33 am
Press Release: Business New Zealand

Business NZ endorses comments by the Auckland Regional Chamber of Commerce questioning anti-growth messages by bank economists.

Business NZ Chief Executive Simon Carlaw says it's curious for banks to be bagging growth when two of their major products - credit cards and mortgages - are part of the lubricants making it easy for consumers to borrow larger and larger sums of money, contributing to inflationary pressures.

"That doesn't mean the Reserve Bank is necessarily at fault - after all, monetary policy is only one part of the equation. The Reserve Bank is looking after its patch while other parts of the economy need as much if not more attention - overspending by central and local government, unnecessarily high tax, too-rigid employment law, skills shortages and inadequate infrastructure - these are all indicators that the recipe isn't right yet.

"Business is focused on driving higher growth - the living standards of all of us depend on it. It's as simple as that. It's up to Government to get the policy environment right so that growth doesn't tip us towards inflation," Mr Carlaw said.

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