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Time For Kiwis To Heed Brash's Warning

The co-incidental announcement of the Reserve Bank's August Monetary Policy Statement and the final enactment of the Employment Relations Bill should be an important signal to all New Zealand businesses and employees.

Federated Farmers Vice President Tom Lambie said that the unchanged Official Cash Rate and Dr Brash's statements that the Reserve Bank did not have to raise interest rates if wage and prices were kept in check, were important messages for both employers and employees negotiating under the Employment Relations Act.

"If business and employees keep a lid on their costs or wages, then New Zealand can avoid damaging inflation and higher interests rates. Increasing prices or wages will simply be self-defeating unless matched by improving productivity," said Mr Lambie.

"New Zealand's inflation has spiked through the upper limit of the inflation target through petrol and cigarette price rises. Underlying general inflation has not yet surged, but this will soon change if either businesses or unions act irresponsibly and seek higher prices or wages."

"This country fought for many years to lower inflation and defeat the subsequent inflationary expectations. We should not return to the mistakes of the past simply for some short-term gains," he commented.

ENDS For further information: Tom Lambie 026-113-161 Catherine Petrey 04-473-7269

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