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Greens support Reserve Bank intervention

11 March 2004
Greens support Reserve Bank intervention

The Green Party has welcomed the Reserve Bank's request to take a more active role in getting the New Zealand dollar down to a realistic level and has offered its conditional support to a parliamentary motion to make this possible.

"We are pleased that the Reserve Bank and the Minister of Finance are finally planning to do something to reduce the crippling effect that the high NZ dollar is having on this country's productive sector" said Green Co-leader Rod Donald.

"Any mechanism that gets the NZ dollar down to a realistic level is worth supporting and therefore we intend to vote for the proposed motion to change the Reserve Bank's funding agreement.

"While the proposal is likely to only have a small influence and involves some risk, it is an important signal that the bank is no longer prepared to sacrifice exporters, tourist operators and domestic manufacturers in order to reach its obligations under the policy targets agreement.

"The Reserve Bank's monetary policy statement contains serious warnings about the fragility of the New Zealand economy which should not be lost sight of in the debate about whether it should intervene in the foreign exchange market.

"They are projecting that unemployment will start rising again early next year, the current account deficit will continue to deteriorate, the terms of trade will fall from +2% to -4.5% next year and household spending will exceed income by 11% from the beginning of next month.

"If domestic property prices slump, as the Reserve Bank is predicting (pgs 5 & 15), then household spending habits will change dramatically, leading to a very hard landing for the whole economy.

"It's time we all faced up to the fact that we are living way beyond our means and adopted policies to achieve self reliance and sustainability," he said.

ENDS

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