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

 


Deflation spectre portends cut to OCR needed

edia statement Friday, January 18, 2013

Deflation spectre portends cut to OCR needed

In light of the latest CPI result today the Reserve Bank should review how it assesses inflation and cut the official cash rate, the Employers and Manufacturers Association says.

"With inflation below the Reserve Bank's mandated target for three consecutive quarters now the official cash rate should be cut, said Kim Campbell, EMA's chief executive.

"Lowering the OCR makes sense for three important reasons:

1) It would help keep us in line with interest rate cuts in Australia, our largest trading partner, thereby maintaining the trans-Tasman cross rate at its present favourable level. Further falls in the Australian dollar could well stifle our exports to Australia and short circuit our fragile recovery.

2) It should keep us within the central bank's mandated target range for inflation by holding CPI prices between one and three per cent over the medium term.

3) It would make investment in productive enterprise more attractive; interest costs are a hand brake on investment.


"If we're lucky it might also help bring our exchange rate down marginally.

"The Reserve Bank needs to separate out the price inflation in Auckland's housing market from the deflation elsewhere in the economy. For example the Producers Price Index has been negative for many months, and Auckland's house prices are driven by insufficient stock due to few new houses being built over recent years.

"No adjustment to interest rates will make any difference to the present lack of housing.

"If housing affordability is an issue, that's hardly the responsibility of the Reserve Bank and we fail to see why the productive sector should be punished for a lack of housing stock.

"Some groups advocate a change to the Reserve Bank Act. That's unnecessary. All the Bank has to do is stick to its own rules."


ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

R18: The Warehouse Group Praised For Removing Games

The decision by New Zealand’s largest retailer The Warehouse Group (TW Group), to withdraw stocks of the latest version of Grand Theft Auto V (GTA V) and other R18 games, has been praised by advocacy group Stop Demand Foundation. More>>

ALSO:

Air NZ Wine Awards: Victory For Villa Maria As Pinot Noir Thrills

It was a night to remember as Villa Maria Estate picked up one of the highest accolades of the evening, the O-I New Zealand Reserve Wine of the Show Trophy, at the 28th Air New Zealand Wine Awards. The Villa Maria Single Vineyard Southern Clays Marlborough ... More>>

ALSO:

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Commerce: Supermarket Inquiry Finds No Breaches By Countdown

The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate... More>>

ALSO:

Crown Accounts: English Flags ‘Challenge’ To Budget Surplus

Finance Minister Bill English is warning next month’s half yearly fiscal and economic update from the Treasury may not forecast a budget surplus, saying that returning the government’s accounts to surplus in 2015 will be “a challenge”, given the decline in commodity prices and weak global inflation. More>>

ALSO:

March 2015: Netflix To Launch In Australia And New Zealand

World’s Leading Internet Television Network to Offer Original Series, Movies, Documentaries, Stand-Up Comedy Specials and TV Shows for Low Monthly Price More>>

ALSO:

Price Of Cheese (Is Up): Dairy Product Prices Fall To Five-Year Low

Dairy product prices fell in the latest GlobalDairyTrade auction to the lowest level in more than five years, led by declines in rennet casein and skim milk powder. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news