Farmers call for OCR pause as exports fall in June quarter
Farmers call for OCR pause as exports fall in the June quarter
Following yesterday’s increase in the Official Cash Rate and export data for the June quarter, Federated Farmers is relieved the OCR will likely be on hold for the remainder of 2014.
“With the rural economy’s sentiment decidedly bearish, an OCR hold is perhaps the best we could hope for,” says Dr William Rolleston, Federated Farmers President.
“Dairy farmers are anxious about their likely payout following falls in international dairy prices and a stubbornly high exchange rate.
“This will not be helped by the seasonally adjusted value of exported goods falling 7.4 percent in the June quarter. Most of the major primary exports were down, including dairy, meat, logs
“Given the drop in farmer confidence and other economic developments, we actually thought there was good case for the OCR to be left unchanged.
“While that’s now academic, the key thing is that the Reserve Bank has clearly communicated its intention to pause and take stock. This is the right signal.
“We were pleased to hear the Reserve Bank state, in no uncertain terms, its concern about the unjustifiably and unsustainably high exchange rate. Clearly, in taking a pause, it wants to take pressure off the exchange rate and this is the right call.
“The fact that inflation remains contained is helpful and it has given the Reserve Bank some breathing space.
“We now hope that the Reserve Bank will be able to keep the OCR on hold for an extended period. To be able to do that other government policies need to help rather than hinder.
“This means fiscal responsibility, tight control of spending and wider policies around regulation. Exporters, whether ICT, tourism or the primary industries, need policies to assist rather than impede productivity and competitiveness.
“We hope that the media and commentators will be examining policies and pledges against this prescription,” Dr Rolleston concluded.
For Federated Farmers’ New Season Farm Confidence Survey, please click here.