Federated Farmers ‘got it right’ on 1% OCR
23 October 2008
Federated Farmers ‘got it right’ on one percent OCR prediction
Federated Farmers President, Don Nicolson, has welcomed the Reserve Bank’s decision to cut New Zealand’s Official Cash Rate (OCR) by one percent today, a move the Federation predicted a full month ago.
“Federated Farmers’ own economists told us the world economy was heading for a very bad place a month ago. That’s why we called on the Reserve Bank to act boldly today to stave off a potential hard landing. Dr Bollard has delivered the goods,” Mr Nicolson said.
“As the primary sector drives the economy, accounting for 64% of everything New Zealand exports. Farmers saw some distressing signals early from international markets. While we called for a big bold cut first, it wasn’t until Australia’s Reserve Bank slashed their cash rate on October 8, which saw others join us in calling for such a move.”
Federated Farmers praises the Reserve Bank for adhering to its preset OCR timetable. This showed New Zealand to be the stable economy it is, despite inflation busting out of the one to three percent band. The Federation pointed to high government spending as an inflationary culprit.
“Overseas economies are going to hell in a handbag with bank failures, bailouts and dramatic interest rate cuts but look at New Zealand. Alan Bollard’s cool headedness sends the right signals to Eurokiwi and Uridashi investors. Its business as usual in New Zealand.
“Given the provincial economy has kept New Zealand from an economic abyss, the one percent interest rate cut will give farmers’ confidence to continue with capital investment. I now hope our free spending politicians will show some fiscal discipline to dampen down inflation.
“New Zealand’s farmers proudly look set to farm us out of recession and back to prosperity,” Mr Nicolson concluded.