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


OCR cut good for business confidence

Media release
23 October 2008

OCR cut good for business confidence

Today’s one per cent reduction in the Official Cash Rate will be good for business confidence and is a reasonable move, says Business NZ.

Chief Executive Phil O’Reilly says inflation is no longer the bogey it was, with international oil prices having dropped around 50 per cent in the last three months.

But he says the move won’t necessarily bring significant interest rate cuts.

“Given NZ’s relatively high reliance on international credit, with around one-fifth of bank funds sourced off-shore, and the international re-pricing of credit risk, it is not obvious that interest rates facing businesses and consumers will go down.

“Also, given that New Zealand has yet to guarantee wholesale market transactions between New Zealand and overseas banks, there is a chance that international credit to New Zealand banks could dry up. While this is not an issue in the very short-term, it could become a problem by Christmas if overseas banks see New Zealand banks as not having government backing.”

Mr O’Reilly said the Reserve Bank is in a reasonably strong position to reduce the OCR further if warranted although any further significant drop in the exchange rate, while good for exporters, could bring the potential for imported inflation.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Back Again: Government Approves TPP11 Mandate

Trade Minister Todd McClay says New Zealand will be pushing for the minimal number of changes possible to the original TPP agreement, something that the remaining TPP11 countries have agreed on. More>>


By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>


Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>


Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>


Divesting: NZ Super Fund Shifts Passive Equities To Low-Carbon

The NZ$35 billion NZ Super Fund’s NZ$14 billion global passive equity portfolio, 40% of the overall Fund, is now low-carbon, the Guardians of New Zealand Superannuation announced today. More>>