OCR May Have Double Effect On Private Businesses
24 July 2008
Lower OCR May Have Double Effect On Private Businesses
The drop in the official cash rate (OCR) from the Reserve Bank today could be the start of good news for New Zealand’s many privately-owned businesses, says accounting and business advisory firm Grant Thornton.
“Many of New Zealand’s businesses have some level of finance tied to their homes, and any consequent lowering of interest rates will be seen positively by them,” said Grant Thornton spokesman Peter Sherwin.
Mr Sherwin said lower interest rates could have a double effect.
“There is not only the potential benefit of a reduced cost of borrowings for private businesses, but lowering the OCR also sends a positive signal to business owners which could bolster confidence levels in what has become a turbulent marketplace.
“We know from our International Business Report surveys how confidence can be quickly affected. For many, this news could be the turning of the tide.”