Federated Farmers: Time For Cool Heads On Economy
Farmers expect the Reserve Bank to continue to maintain its focus on domestic inflation, commented Federated Farmers President Alistair Polson in response to yesterday's 0.5% increase in the OCR, and today's drop in the New Zealand dollar.
"Farmers are acutely aware of the damage that can be inflicted upon New Zealand's competitiveness by rising import prices, leading to widespread domestic inflation."
"While the falling dollar may deliver an immediate boost to the export prices that farmers receive, it also erodes their purchasing power."
By continuing to focus upon domestic inflation, the Reserve Bank can ensure that farmers, and the rest of the economy, genuinely benefit from the upturn in export receipts.
"Federated Farmers believes that it is entirely appropriate for the Reserve Bank to respond to what it considers to be evidence of building inflationary pressures in the domestic economy."
"Farmers feel the pinch of rising interest rates just as badly as other businesses and homeowners, but in reality, New Zealand has been living off borrowed money for too long as it is."
"Maybe it is time for New Zealand to face the realities of running unsustainable current account deficits, and get on with the job of building a stable and competitive economy," concluded Mr Polson.